Consolidated quarterly report for the third quarter of 2014
Grodzisk Wielkopolski, 13th November 2014
Groclin Capital Group
Page 1 of 79
Consolidated quarterly report for the third quarter of 2014
Table of contents Introduction ..................................................................................................................................................................................... 4 Information on the report.................................................................................................................................................................. 4 Definitions and abbreviations............................................................................................................................................................ 4 Forward-looking statements............................................................................................................................................................. 7 Statements concerning risk factors .................................................................................................................................................. 7 Management Board’s report on the operations of Groclin Capital Group to the report for the third quarter of 2014 8 Groclin Group business profile ......................................................................................................................................................... 9 General information.......................................................................................................................................................................... 9 Structure of the Capital Group ....................................................................................................................................................... 11 Changes in the capital structure of Groclin Group .......................................................................................................................... 11 Shareholding structure ................................................................................................................................................................... 12 Summary of consolidated financial results ...................................................................................................................................... 13 Consolidated statement of comprehensive income ........................................................................................................................ 13 Consolidated report on financial position ........................................................................................................................................ 16 Consolidated cash flow statement ................................................................................................................................................. 18 Summary of standalone financial results ......................................................................................................................................... 20 Standalone statement of comprehensive income ........................................................................................................................... 20 Standalone report on financial position ........................................................................................................................................... 22 Standalone cash flow statement .................................................................................................................................................... 24 Relevant information and factors influencing financial results and evaluation of financial standing .................................................... 25 Key factors affecting performance results ....................................................................................................................................... 25 Unusual events and factors ............................................................................................................................................................ 25 Influence of changes in Groclin Group structure on the financial results .......................................................................................... 25 Other material information .............................................................................................................................................................. 26 Factors influencing Groclin Group’s development ........................................................................................................................... 26 Information on market trends ......................................................................................................................................................... 26 Factors influencing the financial results in the perspective of the next quarter ................................................................................. 27 Risk factors.................................................................................................................................................................................... 27 Supplementary information ............................................................................................................................................................ 31 Management Board’s position on the possibility to achieve the projected financial results published earlier .................................... 31 Changes in managing and supervising bodies of Groclin S.A.......................................................................................................... 31 Information on guarantees ............................................................................................................................................................. 32 Significant off-balance items .......................................................................................................................................................... 32 Information on court and arbitration proceedings and proceedings pending before public administrative authorities ....................... 35 Information on transactions with related parties executed on non-market terms and conditions ...................................................... 35 Condensed quarterly consolidated financial statements for the nine months’ period ended 30th September 2014 36 Consolidated financial statements and selected financial data ........................................................................................................ 38 Selected consolidated financial data .............................................................................................................................................. 38 Consolidated statement of comprehensive income ........................................................................................................................ 39 Consolidated report on financial situation ....................................................................................................................................... 41 Consolidated cash flow statement ................................................................................................................................................. 42 Consolidated statement of changes in equity ................................................................................................................................. 43 Standalone financial statements and selected financial data ........................................................................................................... 46 Selected standalone financial data ................................................................................................................................................. 46 Standalone statement of comprehensive income ........................................................................................................................... 47 Standalone report on financial situation .......................................................................................................................................... 49 Standalone cash flow statement .................................................................................................................................................... 50 Standalone statement of changes in equity .................................................................................................................................... 51 Additional explanatory notes .......................................................................................................................................................... 54 1. General information ............................................................................................................................................................... 54 2. Composition of the Group ..................................................................................................................................................... 56 3. Management and supervisory bodies .................................................................................................................................... 58 4. Approval of the financial statements ...................................................................................................................................... 59
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014
5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.
Basis of preparation of consolidated financial statements....................................................................................................... 59 Significant accounting policies ............................................................................................................................................... 60 Business seasonality ............................................................................................................................................................. 64 Information concerning business segments ........................................................................................................................... 64 Dividend paid and proposed.................................................................................................................................................. 67 Earnings per share ................................................................................................................................................................ 67 Interest-bearing loans and borrowings ................................................................................................................................... 68 Equity securities .................................................................................................................................................................... 69 Acquisition of SeaTcon Group ............................................................................................................................................... 69 Significant changes in balance sheet items ............................................................................................................................ 71 Financial instruments ............................................................................................................................................................. 72 Capital management ............................................................................................................................................................. 73 Contingent liabilities and contingent assets ............................................................................................................................ 73 Grants and operations in Special Economic Zone .................................................................................................................. 76 Significant events after balance sheet date ............................................................................................................................ 77
Groclin Capital Group
Page 3 of 79
Consolidated quarterly report for the third quarter of 2014
Introduction Information on the report The hereby consolidated quarterly report of Groclin Group for the third quarter of 2014 was prepared in accordance with the Minister of Finance Regulation of 19th February 2009 concerning current and periodical information submitted by issuers of securities and terms and conditions of classifying as equivalent information required by the law of a non-member state (Journal of Laws of 2009 no. 33, item 259, as amended) and a part of consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), in particular in accordance with International Accounting Standard no 34 and IFRS approved by the EU. IFRS comprise standards and interpretations accepted by the International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”). Condensed consolidated financial statements do not comprise all information and disclosures required in annual consolidated financial statements which are subject to obligatory audit and therefore they should be read in conjunction with consolidated financial statements of the Group for the year ended 31st December 2013. Certain selected information contained in this report comes from Groclin Group’s management accounting system and statistics systems. The hereby consolidated quarterly report presents data in PLN, and all figures, unless otherwise indicated, are given in thousand PLN.
Definitions and abbreviations Insofar as the context does not require otherwise, the following definitions and abbreviations are used in the whole document: Abbreviations applied to business entities, institutions, authorities and documents of the Company Groclin S.A., Company, Issuer, Parent Entity
since 8th July 2014 Groclin Spółka Akcyjna seated in Grodzisk Wielkopolski (before: Inter Groclin Auto Spółka Akcyjna seated in Karpicko, Poland)
Capital Group, Group, Groclin Group
since 8th July 2014 Capital Group comprised of Groclin Spółka Akcyjna together with its subsidiaries (before: Inter Groclin Auto Capital Group and its subsidiaries)
Kabel-Technik-Polska Sp. z o.o., KTP
Kabel-Technik-Polska Spółka z ograniczoną odpowiedzialnością seated in Czaplinek, Poland
IGA Nowa Sól Sp. z o.o., IGA Nowa Sól, IGA NS
IGA Nowa Sól Spółka z ograniczoną odpowiedzialnością seated in Nowa Sól, Poland
Groclin Service Sp. z o.o., Groclin Service, GS
Groclin Service Spółka z ograniczoną odpowiedzialnością seated in Nowa Sól, Poland
Groclin Dolina Sp. z o.o., Groclin Dolina, GD
Groclin Dolina Spółka z ograniczoną odpowiedzialnością, seated in Dolyna, IvanoFrankivsk Oblast, Ukraine
Groclin Karpaty Sp. z o.o., Groclin Karpaty, GK
Groclin Karpaty Spółka z ograniczoną odpowiedzialnością seated in Uzhhorod, Zakarpattia Oblast, Ukraine
MARKETING IGA SA S.j., MARKETING IGA
MARKETING INTER GROCLIN AUTO Spółka akcyjna Spółka jawna seated in Grodzisk Wielkopolski, Poland
Groclin Wiring Sp. z o.o., Groclin Wiring, GW
Groclin Wiring Spółka z ograniczoną odpowiedzialnością seated in Grodzisk Wielkopolski, Poland
Groclin Capital Group
Page 4 of 79
Consolidated quarterly report for the third quarter of 2014
SeaTcon AG, SeaTcon
SeaTcon AG seated in Wendlingen, Germany
Sedis Tec
Sedis Tec seated in Wendlingen, Germany
SeaTcon Group
SeaTcon AG and Sedis Tec
IGA Moto Sp. z o.o.
IGA Moto Spółka z ograniczoną odpowiedzialnością seated in Grodzisk Wielkopolski, Poland
KTP Moto Sp. z o.o.
KTP Moto Spółka z ograniczoną odpowiedzialnością seated in Grodzisk Wielkopolski, Poland
IGA Moto S.K.A.
IGA Moto Spółka z ograniczoną odpowiedzialnością Spółka komandytowo-akcyjna seated in Grodzisk Wielkopolski, Poland
KTP Moto S.K.A.
KTP Moto Spółka z ograniczoną odpowiedzialnością Spółka komandytowo-akcyjna seated in Grodzisk Wielkopolski, Poland
Management Board, Issuer’s Management Board, Company’s Management Board,
Management Board of Groclin S.A.
Supervisory Board, Issuer’s Supervisory Board, Company’s Supervisory Board, SB
Supervisory Board of Groclin S.A.
SM, Shareholders Meeting, Issuer’s Shareholders Meeting, Company’s Shareholders Meeting
Shareholders Meeting of Groclin S.A.
ESM, Extraordinary Shareholders Meeting, Issuer’s Extraordinary Shareholders Meeting, Company’s Extraordinary Shareholders Meeting
Extraordinary Shareholders Meeting of Groclin S.A.
Articles of Association, Issuer’s Articles of Association, Company’s Articles of Association
Articles of Association of Groclin S.A.
KS SEZ, SEZ
Kostrzyńsko-Słubicka Special Economic Zone
NBP
Narodowy Bank Polski (National Bank of Poland)
NBU
National Bank of Ukraine
Court of Registration
District Court Poznań - Nowe Miasto i Wilda in Poznań
Stock Exchange, WSE
Giełda Papierów Wartościowych w Warszawie Spółka Akcyjna (Warsaw Stock Exchange)
KDPW, Depository
Krajowy Depozyt Papierów Wartościowych Spółka Akcyjna seated in Warsaw
KNF
Komisja Nadzoru Finansowego (Polish Financial Supervision Authority)
Definitions of selected terms and financial indicators and abbreviations of currencies Sales profit margin
Ratio of sales profit (loss) to sales income
EBIT
Profit on operating activity (Earnings Before Interest and Taxes)
EBIT profitability, operating profitability, operating profit margin
Ratio of operating profit (loss) to sales income
EBITDA
Operating profit plus depreciation and amortization and impairment charges (Earnings Before Interest, Taxes, Depreciation and Amortization)
EBITDA profitability, EBITDA margin
Ratio of operating profit plus depreciation and amortization and impairment charges to
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014
sales income Gross profit margin
Ratio of gross profit (loss) to sales income
Sales profitability ratio, net profit margin
Ratio of net profit (loss) to sales income
Return on equity, ROE
Ratio of net profit (loss) to equity
Return on assets, ROA
Ratio of net profit (loss) to total assets
EPS
Earnings Per Share, ratio of net profit to the weighted average number of shares
BVPS
Book Value Per Share, ratio of book value of equity to the number of shares
Debt-to-equity ratio
Ratio of total liabilities to equity
Equity-to-non-current assets ratio
Ratio of equity to non-current assets
Interest-bearing debt-to-equity ratio
Ratio of interest-bearing debt and other financial liabilities to equity
Net debt-to-EBITDA ratio
Ratio of interest-bearing debt minus cash to EBITDA
EBITDA-to-interest coverage ratio
Ratio of EBITDA to interest cost
Current ratio
Ratio of current assets to short-term liabilities
Quick ratio
Ratio of current assets minus inventories and short-term prepayments and deferred costs to short-term liabilities
Acid test ratio
Ratio of total cash assets and other cash assets to short-term liabilities
Days inventory outstanding, DSI, DIO
Days Sales of Inventory or Days Inventory Outstanding, ratio of inventories to cost of sales multiplied by the number of days in the period
Days sales outstanding, DSO
Days Sales Outstanding, ratio of trade receivables to sales income multiplied by the number of days in the period
Days payable outstanding, DPO
Days Payable Outstanding, ratio of trade payables to cost of sales multiplied by the number of days in the period
Operating cycle
DSI + DSO
Cash conversion cycle
Operating cycle – DPO
FY
Financial year
1Q
1st quarter of the financial year
2Q
2nd quarter of the financial year
3Q
3rd quarter of the financial year
4Q
4th quarter of the financial year
1H
First half of the financial year
2H
Second half of the financial year
YTD
Year-to-date in the financial year
Like-for-like, LFL
Analogous, with respect to operating result
p.p.
Percentage point – difference between two amounts of one item given in percentage
PLN, zł, złoty
Monetary unit of the Republic of Poalnd
gr
grosz – 1/100 of one zloty (the monetary unit of the Republic of Poland)
UAH
Monetary unit of Ukraine
Euro, EUR
Monetary unit of the European Union
IAS
International Accounting Standards
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014
IFRS
International Financial Reporting Standards
GDP
Gross Domestic Product
Other definitions and abbreviations Series A Shares
382,500 Groclin S.A. series A shares with par value of PLN 1 each.
Series B Shares
2,442,500 Groclin S.A. series B shares with par value of PLN 1 each.
Series C Shares
675,000 Groclin S.A. series C shares with par value of PLN 1 each.
Series D Shares
850,000 Groclin S.A. series D shares with par value of PLN 1 each
Series E Shares
1,150,000 Groclin S.A. series E shares with par value of PLN 1 each.
Series F Shares
6,077,873 Groclin S.A. series F shares with par value of PLN 1 each.
Shares, Issuer’s Shares
Series A, series B, series C, series D, series E, series F shares jointly.
Forward-looking statements The information contained in the hereby report which does not relate to historical facts relates to forward looking statements. Such statements may, in particular, concern the Group’s strategy, business development, market projections, planned investment outlays, and future revenues. Such statements may be identified by the use of expressions pertaining to the future such as, e.g., “believe”, “think”, “expect”, “may”, “will”, “should”, “is expected”, “is assumed”, and any negations and grammatical forms of these expressions or similar terms. The statements contained in the hereby report concerning matters which are not historical facts should be treated only as projections subject to risk and uncertainty. Forward-looking statements are inevitably based on certain estimates and assumptions which, although our management finds them rational, are naturally subject to known and unknown risks and uncertainties and other factors that could cause the actual results to differ materially from the historical results or the projections. For this reason, we cannot assure that any of the events provided for in the forward-looking statements will occur or, if they occurred, about their impact on the Group’s operating activity or financial situation. When evaluating the information presented in this report, one should not rely on such forward-looking statements, which are stated only on the date they are expressed. Insofar as the legal regulations do not contain detailed requirements in this respect, the Company shall not be obliged to update or verify those forward-looking statements in order to provide for new developments or circumstances. Furthermore, the Company is not obliged to verify or to confirm the analysts’ expectations or estimates, except for those required by law.
Statements concerning risk factors In the hereby report, we have described the risk factors that the Management Board of our Group finds typical for our industry; however, this list may not be complete. It may happen that other factors exist which we have not identified and which could have a material and adverse impact on the operations, financial position, operating results or perspectives of Groclin Group. In such circumstances, the price of the Company’s shares listed on the Warsaw Stock Exchange may drop, investors may lose all or part of their invested funds, and the payment of dividend by the Company may be limited. Please analyze carefully the information contained in the “Risk factors” section of the hereby report, which describes the risks and uncertainties related to Groclin Group operations.
Groclin Capital Group
Page 7 of 79
Management Boards report on the operations of Groclin Capital Group to the report for the third quarter of 2014
Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Groclin Group business profile General information Groclin Group is a producer of car equipment and accessories, particularly car seat covers, as well as electrical wiring and steering cabinets. The Group delivers its products mainly to customers of car, railway, energy and telecommunication industries. In May 2014, Groclin S.A. took control over 96% of SeaTcon Group shares. SeaTcon deals in design, development and production of car seats, covers and accessories. In September 2014, sale of an organized part of the Company’s enterprise occurred, i.e. the part of the Company’s operations related to hotel services and sport facilities tenancy. As on the day of publishing of the hereby report, Groclin Group employs nearly 4,000 people in nine production facilities. Our facilities are located in Poland, Ukraine and Germany and have production floor of 120,000 m2 in the aggregate. Our consolidated sales revenue in three quarters of 2014 amounted to PLN 337 million. The Parent Entity Groclin S.A. was established on 3rd November 1997 as a legal successor of Inter Groclin Auto Sp. z o.o. and based on the decision of the District Court in Zielona Góra. The Company conducts business activities on the territory of the Republic of Poland on the grounds of Code of Commercial Companies. The registration court of the Issuer: District Court Poznań – Nowe Miasto i Wilda in Poznań, 9th Commercial Department of the National Court Register, no KRS 0000136069. The Parent Entity was granted statistical REGON number 970679408. On 30th May 2014, Ordinary Shareholders Meeting adopted a resolution concerning change of the name and seat of the Issuer, which was recorded in the commercial register of National Court Register maintained by the district court of jurisdiction over the Issuer’s seat on 8th July 2014. The current name of the Company is Groclin S.A. (before 8th July 2014 Inter Groclin Auto S.A.). The Company’s seat is located in Grodzisk Wielkopolski (before 8th July 2014 the Company’s seat was located in Karpicko near Wolsztyn).
Business profile The principal business of Groclin Group is production and sales of car equipment and accessories, as well as electrical wiring and steering cabinets. The Group conducts the following activities: production of car seat covers made from woven fabrics, natural leather and poroflex, design and development of car seats, covers and accessories, production of single independent bundles in large series for passenger cars, production of wiring for buses (ABS, air conditioning, steering panels), production of wiring for construction and special purpose machines and vehicles, production and assembly of steering cabinets’ wiring, production of railway traction equipment, wiring (signaling, lighting), steering cockpits for locomotives, railway carriage wiring, production of covers for upholstered furniture, production of upholstered furniture.
Groclin Capital Group
Page 9 of 79
Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Our production facilities As on 30th September 2014 as well as on the day of publishing of the hereby report, business operations of the Group were realized in the following facilities: Production Facility in Grodzisk Wielkopolski, Production Facility in Czaplinek, Production Facility in Drawsko Pomorskie, Production Facility in Karpicko 1, Jeziorna 3, Production Facility in Karpicko 2, Brzozowa 19, Production Facility in Nowa Sól, Production Facility in Białogard, Production Facility in Uzhhorod, Ukraine, Production Facility in Wendlingen, Germany, Investment started in Dolyna, Ukraine, Sport and Rehabilitation Center – Hotel “Groclin” and Groclin Medical Center in Grodzisk Wielkopolski.
Our products The product assortment of Groclin Group comprises: Car covers, particularly: car seat covers, made from natural leather as well as from high-quality fabrics, high-quality car seat for special series of cars, door panels and car center consoles covered with natural leather, services of design, development and optimization of car covers and complete car seats. Electrical wiring, particularly: large series wiring for passenger cars, complete wiring for buses (ABS, air-conditioning, steering panels), complete wiring for transformation of a standard production vehicles into special purpose vehicles, applied, among others, in police cars and ambulances, complete wiring for construction machines and vehicles. Steering cabinets, particularly: electrical wiring and steering cabinets for railway trains and telecommunication cabinets, wiring for steering cabinets of elevators and escalators, wiring / equipment for railway traction, mainly signaling and lighting, wiring for steering cockpits of locomotives, wiring for railway carriages, wiring for wind power plants of medium and great powers, wiring for UPS systems, wiring for measuring instruments, wiring for industry lighting systems, mass production of patchcords.
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Other products of the Group include: upholstered furniture and covers for upholstered furniture.
Structure of the Capital Group Groclin Capital Group comprises the Parent Entity Groclin S.A. and its subsidiaries. Groclin S.A. shares have been listed on the main market of Warsaw Stock Exchange since 24th November 1998. The Group conducts its operations in its production facilities located in Poland, Ukraine and Germany, and holds a medical center. Detailed information on Groclin Capital Group’s organization with indication of the entities under consolidation is included in note 2 to condensed consolidated financial statements, included in the further part of the hereby report.
Changes in the capital structure of Groclin Group On 28th February 2014, a merger occurred of the subsidiary Kabel-Technik-Polska Sp. z o.o. (registration of the merger in register of entrepreneurs of the National Court Register maintained by the district court of local jurisdiction over KTP’s seat) with its subsidiaries, i.e. KTP Moto Spółka z ograniczoną odpowiedzialnością seated in Grodzisk Wielkopolski and KTP Moto Spółka z ograniczoną odpowiedzialnością Spółka komandytowo-akcyjna seated in Grodzisk Wielkopolski. The merger was performed by means of KTP’s acquisition of KTP Moto Sp. z o.o. and KTP Moto S.K.A., therefore under article 492 § 1 item 1 of the bill dated 15th September 2000 Code of Commercial Companies (consolidated text: Journal of Laws of 2013, item 1030, hereinafter “KSH”). On 31st March 2014, a merger occurred of the Issuer (registration of the merger in register of entrepreneurs of the National Court Register maintained by the district court of local jurisdiction over Issuer’s seat) with its subsidiaries, i.e. IGA Moto Spółka z ograniczoną odpowiedzialnością seated in Grodzisk Wielkopolski and IGA Moto Spółka z ograniczoną odpowiedzialnością Spółka komandytowo-akcyjna seated in Grodzisk Wielkopolski. The merger was performed by means of the Issuer’s acquisition of IGA Moto Sp. z o.o. and IGA Moto S.K.A., therefore under article 492 § 1 item 1 of the bill dated 15th September 2000 Code of Commercial Companies (consolidated text: Journal of Laws of 2013, item 1030). The proceedings undertaken in order to simplify the Group’s structure were reasonable, taking into account reduction of costs of particular Group entities’ operations, thus increase of business effectiveness, better use of the entities’ resources as well as cash allocation. On 29th May 2014, following the consent of the financing banks, provisions of the agreement dated 8th April 2014 came into effect. Under the agreement, the Management Board of Groclin (the buyer) concluded a sales agreement with the following natural persons: Mr. Ulf Schlenker, Mr. Thomas Schierle, Mr. Massimo Lechthaler and Mrs. Eva Lutz (the sellers), for sale of shares in a joint-stock company under German law SeaTcon AG seated in Wendlingen. Therefore, on 29th May 2014 Groclin S.A. took control over 96% shares of SeaTcon AG, who holds 100% shares in Sedis Tec seated in Wendlingen, Germany. The companies of SeaTcon Group deal in design, development and production of car seats, covers and accessories, focusing on top quality of products on offer. In July 2014, Groclin S.A. acquired 0.6% shares in SeaTcon AG and increased its total share to more than 97%. In October 2014, Groclin S.A. acquired remaining 3% shares in SeaTcon AG. Thus Groclin S.A. has become the only shareholder of SeaTcon Group. On 13th June 2014, the Management Board of Groclin S.A. founded a subsidiary Groclin Wiring Spółka z ograniczoną odpowiedzialnoscią seated in Grodzisk Wielkopolski, with the initial capital of PLN 100,000.00. The field of Groclin Wiring Sp. z o.o. business activities is production of electrical wiring. On 23rd September 2014, Groclin S.A. sold 6,000 shares of a subsidiary Groclin Service Sp. z o.o., representing 6% of the company’s share capital, to a subsidiary IGA Nowa Sól, seated in Nowa Sól.
Groclin Capital Group
Page 11 of 79
Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Shareholding structure As on 13th November 2014, the shareholders holding no less than 5% of the total number of votes in Groclin S.A. Shareholders Meeting are the following:
as at 13.11.2014
as at 28.08.2014
Shareholder
Number of shares
Share capital [% ]
Number of votes
Of total number of votes [% ]
Number of shares
Share capital [% ]
Number of votes
Of total number of votes [% ]
Kabelconcept Hornig
3 110 000
26,86%
3 110 000
26,86%
3 110 000
26,86%
3 110 000
26,86%
Gerstner Managementholding
2 967 873
25,63%
2 967 873
25,63%
2 967 873
25,63%
2 967 873
25,63%
Maria Drzymała
1 131 511
9,77%
1 131 511
9,77%
1 474 760
12,74%
1 474 760
12,74%
Zbigniew Drzymała Others Total Treasury shares Total
657 375
5,68%
657 375
5,68%
1 474 760
12,74%
1 474 760
12,74%
3 711 114
32,05%
3 711 114
32,05%
2 550 480
22,03%
2 550 480
22,03%
11 577 873
100,00%
11 577 873
100,00%
11 577 873
100,00%
11 577 873
100,00%
11 577 873
0,00% 100,00%
11 577 873
0,00% 100,00%
11 577 873
0,00% 100,00%
11 577 873
0,00% 100,00%
Data in the above table is presented as on the day of publishing of the hereby report as well as on the day of publishing of the halfyearly report for the first half of 2014.
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Summary of consolidated financial results Consolidated statement of comprehensive income
3Q
2Q
3Q
YTD
YTD
Change % 3Q'2014/
2014
2014
2013
2014
2013
2Q'2014
3Q'2013
YTD'2013
110 932
109 191
95 302
336 989
189 116
1,6
(136,2)
78,2
109 708
108 403
94 720
334 490
187 371
1,2
15,8
78,5
1 225
788
582
2 499
1 745
55,4
110,5
43,2
Gross profit on sales
9 558
336
13 945
24 788
27 114
2 745,0
(31,5)
(8,6)
sales revenues %
8,62
0,31
14,63
7,36
14,34
8,3 p.p.
(6,0) p.p.
(7,0) p.p.
PLN thousand Revenues
Change % 3Q'2014/
Change % YTD'2014/
including: Sales of products and services Sales of materials and goods
Seling expenses
(2 135)
(2 165)
(1 289)
(5 956)
(3 038)
(1,4)
65,6
96,1
Administrative expenses Other operating income
(9 543) 1 144
(8 899) 7 605
(9 323) 604
(28 430) 9 307
(17 721) 46 271
7,2 (85,0)
2,4 89,4
60,4 (79,9)
Other operating cost EBIT
(339) (1 314)
(579) (3 701)
(309) 3 628
(1 270) (1 560)
(343) 52 283
(41,4) (64,5)
na (136)
na (103,0)
sales revenues %
(1,18)
(3,39)
3,81
(0,46)
27,65
2,2 p.p.
(5,0) p.p.
(28,1) p.p.
EBITDA
2 886
8 880
6 639
18 865
57 542
(67,5)
(56,5)
(67,2)
sales revenues %
2,60
8,13
6,97
5,60
30,43
(5,5) p.p.
(4,4) p.p.
(24,8) p.p.
Financial income Financial cost
226 (2 196)
123 (2 336)
146 (1 810)
360 (6 482)
1 487 (3 797)
84,3 (6,0)
54,7 21,3
(75,8) 70,7
EBT
(3 284)
(5 915)
1 964
(7 682)
49 973
(44,5)
(267,2)
(115,4)
Corporate income tax Net profit/(loss)
1 281 (2 003)
1 539 (4 376)
(311) 1 653
3 233 (4 449)
(1 185) 48 788
(16,7) (54,2)
(511,9) (221,2)
(372,8) (109,1)
sales revenues %
(1,81)
(4,01)
1,73
(1,32)
25,80
2,2 p.p.
(3,5) p.p.
(27,1) p.p.
Earnings per share (in PLN)
(0,17)
(0,38)
0,14
(0,38)
6,01
n.a.
n.a.
n.a.
Commentary of the Management Board on the results of the third quarter of 2014 The third quarter of 2014 was very challenging. Our consolidated sales revenue reached the scheduled level and amounted to PLN 337 million in three quarters of 2014. It represents a like-for-like increase by 21.2% compared to first three quarters of 2013 (PLN 278 million). Profitability recorded in this period was below our expectations. In three quarters of 2014, the Group achieved EBITDA in the amount of nearly PLN 19 million, while net loss in this period amounted to PLN 4.4 million. In July, we undertook special actions aimed at cost reduction, increase of effectiveness and optimization of use of resources in our facilities. In August, most of our customers took a holiday break, as usual in this time of year. We made use of this time to perform a scheduled, two-week technical stoppage in most of our facilities. In September, once the holidays were over, we recorded a significant rise of our profitability and we expect this tendency to continue in the coming months. It gives a foundation to achieve target figures, both for our sales revenue and EBITDA, in the following years 2015 and 2016. While analyzing EBITDA in the reporting period, one needs to remember that it was decreased by one-off costs, which were inevitable for development of production effectiveness and results in the near future. These costs mostly include operating loss on functioning of hotel and sport facility, as well as accelerated depreciation of these assets in connection with sale of the facility in September; costs related to transfer of wiring production from Czaplinek to Grodzisk Wielkopolski; costs of temporary
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
overemployment and its reduction. Adjusted EBITDA of our Group, i.e. less of one-off costs, amounted to PLN 36 million in nine months of 2014. We consider this figure to reflect the actual profitability of our Group in medium and long-term timeframes. In the first three quarters of 2014, we continued the production transfer from the facility in Czaplinek to Grodzisk Wielkopolski. Several projects have been transferred which allowed for launching of new projects for railway industry. Meanwhile, our facility in Uzhhorod operated in this period without any disturbance. In October, our management met the representatives of other foreign companies operating in the region and visited our Uzhhorod facility, as well. It was agreed in the discussion that the situation is stable and that some of the facilities experience production growth related to production transfers from Western and Central Europe to Ukraine. It opens the horizon to consider further development of our facility in Uzhhorod. However, we are aware of the high uncertainty in predictions for further development of the situation in Ukraine, the necessity of constant monitoring of the events in this part of Europe and of readiness to take actions adequate to development of the situation. We kindly request readers to carefully review the description included in the hereby report in “Risk factors” section. In the fourth quarter, we will concentrate on further SeaTcon integration, improvement of efficiency and effectiveness of production, as well as development of financial results, which is connected with further growth of sales in three business units.
Revenues and costs In three quarters of 2014, sales revenue amounted to PLN 336,989 thousand while profit on sales amounted to PLN 24,788 thousand and corresponded to 7.36% of sales revenue. Operating loss amounted to PLN 1,560 thousand, gross loss amounted to PLN 7,682 thousand, while net loss amounted to PLN 4,449 thousand. Sales revenue in the third quarter of 2014 amounted to PLN 110,932 thousand and were 1.6% higher compared to the second quarter of 2014. Profit on sales in the third quarter of the current year amounted to PLN 9,558 thousand. Relatively low profit on sales in the second quarter of the current year in the amount of PLN 336 thousand was caused mainly by accelerated depreciation of hotel and sport facilities in the amount of PLN 8,749 thousand. These facilities were sold in September 2014 without relevant impact on the Group’s results in the third quarter. Relatively high other operating income in the second quarter of the current year were due to profit on bargain purchase of SeaTcon Group in the amount of PLN 6,989 thousand. Eventually, in the third quarter of 2014 Groclin Group recorded net loss in the amount of PLN 2,003 thousand. As the result of the agreement concluded on 21st March 2013 by and between Groclin S.A., Kabel-Technik-Polska sp. z o.o. (KTP), Gerstner Managementholding GmbH (shareholder of KTP), Kabelconcept Hornig GmbH (shareholder of KTP) and Mr. Zbigniew Drzymała, Groclin S.A. acquired 100% shares in share capital of KTP in exchange for 6,077,873 newly issued shares of the Company. Because of the fact that the hitherto shareholders of KTP acquired 52.49% of shares in the Company, the Management Board decided that, in accordance with IFRS 3 Business combinations, the transaction fulfills the definition of reverse acquisition, under which KTP was recognized as the company who acquired Groclin S.A. and Groclin S.A. was recognized as the entity that was acquired by KTP. As a result of this transaction and the manner of its settlement, the data presented above in selected items of consolidated statement of comprehensive income for the nine months’ period ended 30th September 2013 include financial data of KTP until transaction date and of all consolidated entities from transaction date until 30th September 2013, taking into account the necessary adjustments, while the data for the three months’ period ended 30th September 2014, the three months’ period ended 30th June 2014, the three months’ period ended 30th September 2013 and the nine months’ period ended 30th September 2014 includes the results of all entities under consolidation, taking into account the necessary adjustments. The Group has changed presentation of selling and administrative expenses, as well as cost of sales of products and services for the six months’ period ended 30th June 2014. The changes caused an increase of selling expenses in the second quarter of 2014 from PLN 1,627 thousand as presented in the consolidated half-yearly report for the first half of 2014 to PLN 2,165 thousand, a
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
decrease of administrative expenses from PLN 9,543 thousand to PLN 8,899 thousand and a decrease of profit on sales (due to increase of cost of sales of products and services) from PLN 442 thousand to PLN 336 thousand. The introduced changes have not influenced EBIT or profit/loss for the second quarter of the current year.
Profitability analysis Profitability on different levels is presented in the table below:
PLN thousand
3Q
2Q
3Q
YTD
YTD
Change % 3Q'2014/
Change % 3Q'2014/
Change % YTD'2014/
2014
2014
2013
2014
2013
2Q'2014
3Q'2013
YTD'2013
Gross profit on sales
9 558
336
13 945
24 788
27 114
2 745,0
(31,5)
(8,6)
sales revenues %
8,62
0,31
14,63
7,36
14,34
8,3 p.p.
(6,0) p.p.
(7,0) p.p.
EBITDA
2 886
8 880
6 639
18 865
57 542
(67,5)
(56,5)
(67,2)
sales revenues %
2,60
8,13
6,97
5,60
30,43
(5,5) p.p.
(4,4) p.p.
(24,8) p.p.
EBIT
(1 314)
(3 701)
3 628
(1 560)
52 283
(64,5)
(136,2)
(103,0)
sales revenues %
(1,18)
(3,39)
3,81
(0,46)
27,65
2,2 p.p.
(5,0) p.p.
(28,1) p.p.
Net profit/(loss)
(2 003)
(4 376)
1 653
(4 449)
48 788
(54,2)
(221,2)
(109,1)
sales revenues %
(1,81)
(4,01)
1,73
(1,32)
25,80
2,2 p.p.
(3,5) p.p.
(27,1) p.p.
ROE - Return on equity (% )
(1,4)
(3,1)
0,9
(3,2)
25,9
1,7 p.p.
(2,3) p.p.
(29,0) p.p.
ROA - Return on assets (% )
(0,5)
(1,0)
0,4
(1,0)
10,7
0,5 p.p.
(0,8) p.p.
(11,7) p.p.
EBITDA for three quarters of 2014 amounted to PLN 18,865 thousand, which equals 5.6% of sales revenue. In three quarters of 2014, return on equity amounted to -3.2% while return on assets amounted to -1.0%. EBITDA for the third quarter of 2014 amounted to PLN 2,886 thousand (2.6% of sales revenue) and were lower by 67.5% compared to the second quarter of 2014. EBITDA in the second quarter of 2014 was particularly influenced by profit on bargain purchase of SeaTcon. In the third quarter of 2014, return on equity ratio amounted to -1.4% while return on assets amounted to -0.5%.
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Consolidated report on financial position Change 30/09/2014
Change 30/09/2014
30/09/2014
31/12/2013
30/09/2013
-31/12/2013
-30/09/2013
273 576 61 165 88 608
286 684 55 339 73 593
291 429 70 180 91 521
(13 108) 5 826 15 015
(17 853) (9 015) (2 913)
86 778
69 491
84 384
17 287
2 394
6 133
20 208
1 553
(14 075)
4 580
Cash and equivalents Total assets
8 383 437 865
7 372 443 196
2 129 456 812
1 011 (5 331)
6 254 (18 947)
Equity Short-term liabilities
141 196 148 081
163 363 114 408
188 513 161 085
(22 167) 33 673
(47 317) (13 004)
Trade payables
56 546
55 399
50 170
1 147
6 376
Inerest bearing liabilities
78 429
24 178
89 251
54 251
(10 822)
Other liabilities
13 106
34 831
21 664
(21 725)
(8 558)
148 587
165 425
107 214
(16 838)
41 373
126 942
146 316
82 173
(19 374)
44 769
21 645
19 109
25 041
2 536
(3 396)
437 865
443 196
456 812
(5 331)
(18 947)
PLN thousand
Non-current assets Inventory Receivables including trade receivables
Other current assets
including:
Long-term liabilities including: Interest-bearing liabilities Other liabilities
Total equity and liabilities
As on 30th September 2014, total assets amounted to PLN 437,865 thousand, compared to PLN 443,196 thousand as at the end of 2013, which represents a decrease by PLN 5,331 thousand.
Non-current assets As at the end of September 2014, non-current assets amounted to PLN 273,576 thousand and represented 62.5% of total assets compared to PLN 286,684 thousand as at the end of 2013 (64.7%). Non-current assets comprise mainly tangible and intangible assets. The reason for the decrease, apart from amortization/depreciation allowances and sale of hotel and sport facility, was UAH/PLN exchange rate decrease by app. 31% (calculated based on exchange rates announced by National Bank of Poland) and consequently lower amount of property, plant and equipment of the Group held by its Ukrainian subsidiaries, that is Groclin Karpaty and Groclin Dolina, expressed in PLN.
Current assets At the end of September 2014, current assets amounted to PLN 164,289 thousand (PLN 156,512 thousand at the end of December 2013). Within current assets, inventories increased by PLN 5,826 thousand, receivables increased by PLN 15,015 thousand, other current assets decreased by PLN 14,075 thousand, and cash and cash equivalents increased by PLN 1,010 thousand. Current assets represented 37.5% of total assets as at the end of September 2014 (35.3% as at the end of 2013) and included inventories 14.0% (12.5% as at the end of 2013), receivables 20.2% (16.6% as at the end of 2013), other current assets 1.4% (4.6% as at the end of 2013) and cash and cash equivalents 1.9% (1.7% as at the end of 2013). The increase of inventories and receivables (mostly trade receivables) was related to increased sales of Group’s products and larger production. The decrease of other current assets was caused by decrease of receivables on the grounds of VAT.
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Equity Equity amounted to PLN 141,196 thousand as at the end of the third quarter of 2014 (PLN 163,363 thousand as at the end of 2013. Equity represented 32.2% of total equity and liabilities as at the end of September 2014 compared to 36.9% of total equity and liabilities as at the end of December 2013. The decrease of equity results from the increase of negative equity mainly on revaluation of Groclin Karpaty and Groclin Dolina for whom UAH is the functional currency, as well as net loss for nine months of the current year.
Short-term liabilities As at the end of September 2014, short-term liabilities amounted to PLN 148,081 thousand (33.8% of total equity and liabilities) compared to PLN 114,408 thousand (25.8% of total equity and liabilities) as at the end of 2013. In nine months of 2014 an increase of short-term liabilities occurred by PLN 33,673 thousand. The change resulted mainly from reclassification of a part of long-term loans to short-term loans according to IAS requirements and was not imposed by bank loans agreements.
Long-term liabilities As at the end of September 2014, long-term liabilities amounted to PLN 148,587 thousand (33.9% of total equity and liabilities) compared to PLN 165,425 thousand (37.3% of total equity and liabilities) as at the end of 2013. In the analyzed period, a decrease of long-term liabilities occurred by PLN 16,838 thousand, mainly due to the aforementioned change of bank loans classification.
Debt analysis
3Q
4Q
3Q
Change % 3Q'2014/
2014
2013
2013
4Q'2013
3Q'2013
210,1
171,3
142,3
38,8 p.p.
67,8 p.p.
Equity-to-non-current assets ratio (% )
51,6
57,0
64,7
(5,4) p.p.
(13,1) p.p.
Interest-bearing debt-to-equity ratio (% )
145,5
104,4
90,9
41,1 p.p.
54,5 p.p.
Debt-to-equity ratio (% )
Change % 3Q'2014/
As on 30th September 2014, debt to equity ratio amounted to 210.1% and was higher by 38.8 p.p. compared to the end of 2013. Higher debt to equity ratio at the end of September 2014 was due to decrease of equity and increase of liabilities compared to 31st December 2013. Equity to non-current assets amounted to 51.6% as at the end of September 2014 and was lower by 5.4 p.p. than as at the end of 2013. Interest bearing debt to equity ratio amounted to 145.5% as at the end of September 2014 and was higher by 41.1 p.p. compared to the end of December 2013. The increase of this ratio as at the end of the current period was due to decrease of equity and increase of loan debt compared to the end of 2013.
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Liquidity analysis
3Q
2Q
3Q
Change % 3Q'2014/
Change % 3Q'2014/
2014
2014
2013
2Q'2014
3Q'2013
Current liquidity ratio
1,1x
1,1x
1,0x
0,0
0,1
Quick liquidity ratio
0,7x
0,7x
0,6x
(0,0)
0,1
Acid test ratio (cash liquidity)
0,1x
0,0x
0,0x
0,1
0,0
Inventory turnover DSI (days)
54,3
54,7
77,6
(0,4)
(23,3)
Receivables turnover DSO (days)
70,4
79,1
79,7
(8,7)
(9,3)
Liabilities turnover DPO (days)
50,2
60,2
55,5
(10,0)
(5,3)
Operating cycle (days) Cash conversion cycle (days)
124,7 74,5
133,8 73,6
157,3 101,8
(9,1) 0,9
(32,6) (27,3)
As at the end of September 2014, current liquidity ratio and quick liquidity ratio amounted respectively to 1.1x and 0.7x and were similar to as on 30th June 2014. Acid test ratio amounted to 0.1x as at the end of September of the current year and was higher by 0.1 than at the end of June 2014. Cash conversion cycle in the third quarter of 2014 amounted to 74 days and has not significantly changed compared to the second quarter of 2014.
Consolidated cash flow statement
3Q
2Q
3Q
YTD
YTD
Change % 3Q'2014/
Change % 3Q'2014/
Change % YTD'2014/
2014
2014
2013
2014
2013
2Q'2013
3Q'2013
YTD'2013
(4 143)
21 519
(31 474)
(13 919)
(33 036)
(119,3)
(87)
(58)
EBT
(3 284)
(5 834)
1 964
(7 682)
49 973
(43,7)
(267)
(115)
Amortization, depreciation and impairment ∆ in working capital
4 200 (6 436)
12 582 18 318
3 011 (30 475)
20 425 (24 588)
5 259 (36 318)
(66,6) (135,1)
39 (79)
288 (32)
1 377
(3 547)
(5 974)
(2 075)
(51 950)
(138,8)
(123)
(96)
185 10 092
(9 055) (13 405)
(5 695) 34 119
(10 748) 24 974
(4 480) 39 586
(102,0) (175,3)
(103) (70)
140 (37)
6 134
(941)
(3 050)
306
2 070
(751,6)
(301)
(85)
PLN thousand
Cash flows from operations including:
Other corrections Cash flows from investing activities Cash flows from financing activities Total Cash Flow
Cash flows from operating activities In three quarters of 2014, net cash flows from operating activities amounted to PLN -13,919 thousand (PLN -4,143 thousand in the third quarter of 2014). Negative cash flows in this period resulted mainly from gross loss for the period and increase of working capital.
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Cash flows from investing activities In three quarters of 2014, cash flows from investing activities amounted to PLN -10,748 thousand and resulted mainly from expenditures on property, plant and equipment, R&D works and the expenditure for acquisition of SeaTcon Group. In the third quarter of 2014, cash flows from investing activities amounted to PLN +185 thousand and were due to inflows from sale of hotel and sport facility, partially assigned for further R&D works and purchases of property, plant and equipment.
Cash flows from financing activities In three quarters of 2014, cash flows from financing activities amounted to PLN +24,974 thousand (PLN +10,092 in the third quarter of 2014) and resulted mainly from the inflows on the grounds of bank loans.
Groclin Capital Group
Page 19 of 79
Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Summary of standalone financial results Standalone statement of comprehensive income
3Q
2Q
3Q
YTD
YTD
Change % 3Q'2014/
2014
2014
2013
2014
2013
2Q'2014
3Q'2013
YTD'2013
60 514
68 237
42 972
193 407
126 442
(11,3)
40,8
53,0
Sales of products and services
36 987
40 838
18 155
118 155
42 864
(9,4)
103,7
175,7
Sales of materials and goods
23 527
27 399
24 817
75 251
83 578
(14,1)
(5,2)
(10,0)
PLN thousand
Revenues:
Change % 3Q'2014/
Change % YTD'2014/
including:
Gross profit on sales
7 071
(15)
3 440
13 630
10 945
(47 323,5)
105,6
24,5
sales revenues %
11,68
(0,02)
8,01
7,05
8,66
11,7 p.p.
(8,0) p.p.
(1,6) p.p.
(1 996) (4 317)
(1 806) (4 371)
(156) (3 784)
(5 346) (13 923)
(516) (10 677)
10,5 (1,3)
1 179,2 14,1
936,1 30,4
Other operating income Other operating cost
765 (379)
500 (432)
299 (353)
1 600 (1 111)
3 291 (849)
53,1 (12,2)
155,8 7,3
(51,4) 30,9
Selling expenses Administrative expenses
EBIT
1 145
(6 124)
(554)
(5 149)
2 194
(118,7)
(306,7)
(334,7)
sales revenues %
1,89
(8,97)
(1,29)
(2,66)
1,74
10,9 p.p.
3,2 p.p.
(4,4) p.p.
EBITDA
2 325
1 073
426
4 346
4 604
116,6
445,7
(5,6)
sales revenues %
3,84
1,57
0,99
2,25
3,64
2,3 p.p.
2,9 p.p.
(1,4) p.p.
877
(251)
2
2 350
9
(449,0)
43 744,1
26 015,5
(1 226) 796
(851) (7 227)
1 009 457
(2 748) (5 547)
(1 774) 429
44,0 (111,0)
(221,5) 74,1
54,9 (1 393,0)
Corporate income tax Net profit
1 330 2 126
558 (6 668)
(291) 166
2 458 (3 089)
(175) 254
138,3 (131,9)
(557,0) 1 180,4
(1 504,8) (1 315,9)
sales revenues %
3,51
(9,77)
0,39
(1,60)
0,20
13,3 p.p.
3,1 p.p.
(1,8) p.p.
Financial income Financial cost EBT
Revenue, cost of sales, profit on sales Standalone sales revenue in three quarters of 2014 amounted to PLN 193,407 thousand and increased by PLN 66,965 thousand compared to the corresponding period of the previous year. Cost of sales in the period amounted to PLN 179,776 thousand and increased by PLN 64,279 thousand compared to three quarters of 2013. Profit on sales in three quarters of 2014 amounted to PLN 13,630 thousand and represented 7.1% of sales revenue (three quarters of 2013: PLN 10,945 thousand). Operating loss in three quarters of 2014 amounted to PLN 5,149 thousand, gross loss amounted to PLN 5,547 thousand, and net loss amounted to PLN 3,089 thousand. Standalone sales revenue in the third quarter of 2014 amounted to PLN 60,514 thousand and increased by 40.8% compared to the corresponding period of the previous year. Profit on sales in the period amounted to PLN 7,071 thousand. Loss on sales in the second quarter of 2014 in the amount of PLN 15 thousand resulted primarily from accelerated depreciation of sport and hotel facilities in the amount of PLN 6,041 thousand. Eventually, in the third quarter of 2014, Groclin S.A. recorded net profit of 2,126 thousand.
Groclin Capital Group
Page 20 of 79
Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Groclin S.A. has changed presentation of selling and administrative expenses, as well as cost of sales of products and services for the six months’ period ended 30th June 2014 and 31st March 2014. The changes caused an increase of selling expenses in the second quarter of 2014 from PLN 529 thousand as presented in the standalone half-yearly report for the first half of 2014 to PLN 1,806 thousand, a decrease of administrative expenses from PLN 5,753 thousand to PLN 4,371 thousand and a decrease of profit on sales (due to increase of cost of sales of products and services) from PLN 90 thousand to PLN -15 thousand. The introduced changes have not influenced EBIT or net loss for the second quarter of the current year.
Selling expenses, administrative expenses In three quarters of 2014, selling expenses amounted to PLN 5,346 thousand (PLN 516 thousand in three quarters of 2013) while administrative expenses amounted to PLN 13,923 thousand (PLN 10,677 thousand in three quarters of 2013).
Other operating income and other operating cost In three quarters of 2014, other operating income amounted to PLN 1,600 thousand while other operating cost amounted to PLN 1,111 thousand. In the third quarter of 2014, other operating income amounted to PLN 765 thousand while other operating cost amounted to PLN 379 thousand. EBITDA in three quarters of 2014 amounted to PLN 4,346 thousand (2.3% of sales revenue), while in the third quarter of the current year amounted to PLN 2,325 thousand (3.8% of sales reveue).
Financial income and financial cost In three quarters of 2014, financial income amounted to PLN 2,350 thousand, while financial cost amounted to PLN 2,748 thousand. In the third quarter of 2014, financial income amounted to PLN 877 thousand, while financial cost amounted to PLN 1,226 thousand. Financial income of the period is related to dividends and shares in profit of related parties, as well as to profit on sales of the subsidiary Groclin Service shares, while financial cost comprises mostly interest cost on bank loans.
Groclin Capital Group
Page 21 of 79
Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Standalone report on financial position Change 30/09/2014
Change 30/09/2014
30/09/2014
31/12/2013
30/09/2013
-31/12/2013
-30/09/2013
Non-current assets
396 417
396 769
392 377
(352)
4 040
including shares in subsidiaries, assosiations and joint venture
258 854
259 851
253 938
(997)
4 916
18 540 69 338
14 597 46 534
15 977 50 973
3 943 22 804
2 563 18 365
Other current assets Cash and equivalents Total assets
139 6 385 490 818
292 6 584 464 776
1 206 460 533
(153) (199) 26 042
139 5 179 30 285
Equity
324 178
325 205
333 973
(1 027)
(9 795)
95 033 71 608
53 435 86 136
31 978 94 582
41 598 (14 528)
63 055 (22 974)
490 818
464 776
460 533
26 042
30 285
PLN thousand
Inventory Receivables
Short-term liabilities Long-term liabilities Total equity and liabilities
As on 30th September 2014, total standalone assets amounted to PLN 490,818 thousand, compared to PLN 464,776 thousand as at the end of 2013.
Non-current assets As at the end of September 2014, non-current assets amounted to PLN 396,417 thousand and represented nearly 80.8% of total assets, which means that this share decreased by 4.6 p.p. compared to the end of 2013. The main item of non-current assets is shares in subsidiaries (65.3%) as well as tangible assets (21.6%). The decrease of tangible assets in three quarters of 2014 by PLN 10,414 thousand compared to the end of 2013 resulted from sales of sport and hotel facility, apart from amortization and depreciation. Intangible assets increased from PLN 1,381 thousand as on 31st December 2013 to PLN 8,698 thousand as on 30th September 2014. Increase of intangible assets in three quarters of 2014 related to acquisition of assets, mainly R&D works concerning preparation of new production projects and development of car covers production process. Deferred tax assets as at the end of September 2014 amounted to PLN 2,071 thousand compared to PLN 0 thousand as at the end of 2013, while deferred tax liability amounted to PLN 0 thousand compared to PLN 285 thousand as on 31st December 2013. Changes of deferred tax result from temporary differences based on which deferred tax is recognized.
Current assets At the end of September 2014, current assets reached PLN 94,401 thousand compared to PLN 68,007 thousand at the end of 2013. Within current assets inventories increased by PLN 3,943 thousand, receivables increased by PLN 20,591 thousand, other current assets increased by PLN 2,060 thousand, while cash and cash equivalents decreased by PLN 199 thousand. Current assets represented 19.2% of total assets as at the end of September 2014 (14.6% as at the end of 2013), including inventories 3.8% (3.1% at the end of 2013), trade receivables 13.3% (9.7% at the end of 2013), other current assets 0.8% (0.4% at the end of 2013), and cash and cash equivalents 1.3% (1.4% at the end of 2013). Inventories and receivables (particularly trade receivables) increased mainly due to the surge of realized contracts for covers and electrical wiring.
Groclin Capital Group
Page 22 of 79
Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Equity At the end of the third quarter 2014, equity amounted to PLN 324,178 thousand, compared to PLN 325,205 thousand at the end of 2013. At the end of September 2014, equity represented 66.0% of total equity and liabilities, while at the end of 2013 it represented 70.0% of total equity and liabilities. Decrease of equity results from net loss for nine months of the current year.
Short-term liabilities As at the end of September 2014, short-term liabilities amounted to PLN 95,033 thousand (19.4% of total equity and liabilities) compared to PLN 53,435 thousand at the end of 2013 (11.5% of total equity and liabilities). The increase of short-term liabilities (of PLN 41,598 thousand) was mainly due to increase of trade liabilities by PLN 14,732 resulting from greater purchases concerning realization of contracts for covers and electrical wiring, as well as increase of loans and borrowings by PLN 34,937 thousand due to reclassification of a portion of long-term loans to short-term loans, in compliance with IAS. This change was not imposed by bank loan agreements. Short-term provisions decreased from PLN 3,046 thousand as on 31 December 2013 to PLN 0 thousand as on 30th September 2014. The decrease was due mainly to use of the provision on loss on contracts and release of other short-term provisions.
Long-term liabilities As at the end of September 2014, standalone long-term liabilities amounted to PLN 71,608 thousand (14.6% of total equity and liabilities) compared to PLN 86,136 thousand at the end of 2013 (18.5% of total equity and liabilities). The decrease of long-term liabilities resulted primarily from the aforementioned change of loans presentation. Long-term provisions increased from PLN 2,785 thousand as on 31st December 2013 to PLN 4,454 thousand as on 30th September 2014, as a result of acquisition of SeaTcon Group shares, in the part concerning the acquisition price which was not paid and was depended to a great extent on future financial results achieved by SeaTcon Group.
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Standalone cash flow statement Change % Change % 3Q'2014/ 3Q'2014/
Change % YTD'2014/
3Q
2Q
3Q
YTD
YTD
PLN thousand
2014
2014
2013
2014
2013
2Q'2014
3Q'2013
YTD'2013
Cash flows from operations
956
11 184
(10 837)
(7 635)
(9 257)
(91,4)
(108,8)
(17,5)
796
(7 227)
457,0
(5 547)
429
(111,0)
74,1
(1 393,0)
1 180 (557)
7 197 8 191
980,0 (8 054,0)
9 495 (10 696)
2 410 (11 246)
(83,6) (106,8)
20,4 (93,1)
294,0 (4,9)
737 (1 199)
950 2 071
520,0 (4 740,0)
2 083 (2 970)
1 453 (2 303)
(22,4) (157,9)
41,8 (74,7)
43,4 29,0
Cash flows from investing activities Cash flows from financing activities
(896) 4 873
(8 043) (2 702)
(24 934) 34 827
(8 684) 16 075
(29 641) 34 281
(88,9) (280,3)
(96,4) (86,0)
(70,7) (53,1)
Total Cash Flow
4 933
438
(944)
(244)
(4 617)
1 025,2
(622,5)
(94,7)
including:
EBT Amortization and depreciation ∆ in working capital Interest and dividend (net) Other corrections
Cash flow statement presents decrease of cash in nine months of 2014 by PLN 244 thousand, including: negative cash flows from operating activities in the amount of PLN -7,635 thousand, negative cash flows from investing activities in the amount of PLN -8,684 thousand, positive cash flows from financing activities in the amount of PLN +16,075 thousand.
Cash flows from operating activities In three quarters of 2014, net cash flows from operating activities amounted to PLN -7,635 thousand (PLN 956 thousand in the third quarter of 2014), mainly due to gross loss for the period and increase of trade receivables and inventories.
Cash flows from investing activities In three quarters of 2014, cash flows from investing activities amounted to PLN -8,684 thousand (PLN -896 thousand in the third quarter of 2014) and resulted from expenses for purchases of property, plant and equipment, the inflow from sales of sport and hotel facility, expenditures for R&D works, expense for acquisition of SeaTcon Group, and foundation of Groclin Wiring Sp. z o.o., as well as granting subsidiary SeaTcon a loan in the amount of EUR 400 thousand.
Cash flows from financing activities In the third quarter of 2014, cash flows from financing activities amounted to PLN +16,075 thousand (PLN 4,873 thousand in the third quarter of 2014) and were particularly influenced by increase of bank loan debt.
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Relevant information and factors influencing financial results and evaluation of financial standing Key factors affecting performance results The Group’s operating activity has been historically and will be in the future influenced by the following key factors: macroeconomic and other economic factors; car industry standing; dominant position of car consortia; high competitiveness in the segment of car industry suppliers; energy and railway industries standing; no chance for material influence on prices and/or quality of production materials; relatively high share of labor costs in production process; foreign exchange rates fluctuations.
Unusual events and factors The following event and factors, which occurred in the third quarter of 2014, may be seen as unusual: on 29th September 2014, a preliminary sale agreement was concluded and signed for sale of an organized part of an enterprise connected with hotel industry and tenancy of sport facilities. Sales price amounted to PLN 3,620 thousand. The transaction did not materially influence the results of the Group in the third quarter of 2014. However, it influenced worsening of financial result for nine months of the current year because of accelerated depreciation recognized in the first half of 2014. In the third quarter of 2014 (on 30th July 2014 and 6th August 2014), Groclin S.A. concluded derivative transactions for options PUT and CALL related to sale of EUR. The Company covered EUR 7,200 thousand with these instruments. The transactions are settled monthly in three years, twice a month, EUR 150 thousand until 5th and until the last day of each calendar month. From August 2014 until July 2015: EUR 50 thousand twice a month with the exchange rate of 4.1850 and 4.2300; from August 2014 until July 2016: EUR 50 thousand twice a month with the exchange rate of 4.2250 and 4.2700; and from August 2014 until July 2017: EUR 50 thousand twice a month with the exchange rate of 4.2650 and 4.3150. The Company shall not exercise its rights/duties in case the barrier exchange rate (monitored throughout the derivative’s life) reaches in a settlement period the level of 3.8500. Rights and duties resulting from the concluded instruments expire once the barrier has been reached. In the period from August until 30th September 2014, the Company recognized financial income on the grounds of realized options in the amount of PLN 7 thousand.
Influence of changes in Groclin Group structure on the financial results Merger of a subsidiary Kabel-Technik-Polska Sp. z o.o. with subsidiaries KTP Moto Sp. z o.o. and KTP Moto S.K.A., merger of the Parent Entity Groclin S.A. with subsidiaries IGA Moto Sp. z o.o. and IGA Moto S.K.A., as well as foundation of the subsidiary Groclin Wiring Sp. z o.o. did not materially influence the manner of consolidation and presentation of financial data. Taking control over SeaTcon AG Group’s companies resulted in arousal of profit on bargain purchase. More details have been provided in note 13 to condensed consolidated financial statements, in the latter part of the hereby report.
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Sale of 6,000 shares of the subsidiary Groclin Service Sp. z o.o., constituting 6% of the company’s share capital, by the Issuer to the subsidiary IGA Nowa Sól did not influence the manner of consolidation and presentation of financial data.
Other material information On 23rd September 2014, a tax group, consisting from 1st January 2014 of four companies: Groclin S.A., Kabel-Technik-Polska Sp. z o.o., IGA Nowa Sól Sp. z o.o. and Groclin Service Sp. z o.o., has been dissolved. From 23th September 2014, these companies perform individual settlements of corporate income tax. On 23rd June 2014, a subsidiary Kabel-Technik-Polska Sp. z o.o. received permit no 267 to conduct business activities in Kostrzyńsko-Słubicka SEZ. The condition to conduct business activities is performance of capital expenditures for investment purposes in the area of the SEZ in the amount of no less than PLN 2,700,000.00 and reaching employment of no less than 150 employees until 31st August 2015. This number of employees shall be maintained until 31st August 2020. In the period covered by the hereby report, no other material events occurred, which would have influence on the assessment of HR, capital and financial situation, as well as on financial results and their adjustments, and which would be relevant for the evaluation of the Company’s possibility to realize its liabilities.
Factors influencing Groclin Group’s development Information on market trends External conditions, including those resulting from car, energy and railway industries economic situation, as well as internal, mainly related to production processes, have a material influence on development of business activity of Groclin Group.
External factors Main external factors, which may influence the future standing of Groclin Group, include: relatively weak demand for car industry products, redundancy of production capacities in car industry, good prospects for development of railway and energy industries, growth of competitiveness in our markets, investment levels in the industry, particularly in car, energy and railway industries, fluctuations of interest rates and costs of raising funds, pricing of cost factors regulated by the state – energy, fuel, taxes, etc., state economic policy towards exporters, state policy and regulations concerning employment and rehabilitation of disabled persons.
Internal factors Main internal factors relevant for the company’s results and operations include: improvement of production capacities use, implementation of adjustments and innovations in production management system, automation of main technological processes, optimization of production cost,
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
adjusting employment level and employment structure to the needs resulting from ongoing projects, hiring and keeping highly-qualified personnel, development of product assortment and services, mostly in the area of R&D, maintaining necessary certificates and management systems, including quality assurance system.
Factors influencing the financial results in the perspective of the next quarter Relevant factors influencing the financial results in the perspective of the following months include: Progress of events in Ukraine and its influence on operation of the facility in Uzhhorod. Unstable political situation in Ukraine, particularly potentially negative development of the events may have an adverse impact on the possibility of realization of plans, mostly for winning new contracts but also for realization of the currently ongoing ones. The Company is one of the bidders for new contracts realized, among others, in car industry. The situation in Ukraine has a direct impact on the Group’s assessment concerning choosing the supplier. We cannot determine to what extent the current situation will affect the final choice of the supplier. In three quarters of 2014, Groclin Karpaty achieved sales revenue in the amount PLN 5,445 thousand and employed nearly 300 employees. Termination of the project for transfer of wiring production from the facility in Czaplinek to Grodzisk Wielkopolski. In 2013 and in three quarters of 2014, the Group incurred significant expenses concerning the realization of the transfer process between the facilities. Further transfer of contracts is going to be continued in the next quarter, in which the finalization of the project is scheduled. It is a project which has a material influence on financial results. The main features relevant for the project realization are punctuality of realization, time needed to hire personnel, as well as when the Group is able to reach the planned production efficiency and the potential operating problems connected with project transfer. Launching of new projects in the facility in Czaplinek. One of the assumptions of the transaction of business combination of Groclin S.A. and Kabel-Technik-Polska Sp. o.o., realized in June 2013, was the transfer of electrical wiring production. The ongoing transfer of electrical wiring production from Czaplinek to Grodzisk Wielkopolski determines the possibility of launching new projects for railway industry. Possible delay in launching new projects in Czaplinek will be connected with the necessity of incurring additional employment cost. Production efficiency. The key element which will have a significant influence on the financial results of the next quarter is the ability to achieve a high level of production efficiency, both related to car covers and electrical wiring production.
Risk factors Significant changes in risk factors In the third quarter of 2014, no significant changes in risk factors, as described in the annual report for 2013, occurred. However, the Company has broadened the scope of risks mentioned.
Risk factors connected with the Group’s environment The order in which the following risk factors are presented does not reflect the likelihood of their occurrence, scope or significance of the risks.
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Foreign exchange rates risk The Group companies’ revenues, costs and results are exposed to the risk of changes of currency exchange rates, in particular, PLN and UAH towards EUR. Our Group exports most of the products to European markets, generating a large part of its sales revenue in EUR and a smaller part in GBP. The costs of procurement of raw materials for production are incurred mainly in EUR, PLN and USD. For the purpose of limiting the currency risk, natural hedging is applied, i.e. matching the currency structure of assets and liabilities. Receivables, liabilities and other accounts exist in the Group mainly in EUR. Moreover, we have liabilities on the grounds of loans taken in EUR. To hedge against periodic fluctuations of exposure connected with volatility of currency transactions volume, derivatives (mostly forward transactions) are applied. Unfavorable exchange rates fluctuations may have an adverse impact on financial results achieved. The risk of changes of interest rates The Group is exposed to the risk of changes of interest rates, mainly due to an existing interest debt. This risk results from fluctuation in the benchmark interest rate such as WIBOR for debt in PLN and EURIBOR for the debt in EUR. The Group has loans which are denominated mostly in EUR, for which interest is dependent on EURIBOR changes. Changes of EURIBOR have direct impact on the levels of financial cost. In three quarters of 2014, the Group did not apply hedging instruments to hedge against interest rate risk. Unfavorable changes of interest rates may adversely affect the financial results of the Group. Risk of changes in law Our Group operates in a legal environment characterized by a high level of uncertainty. Regulations concerning our activities are often amended and sometimes there is no uniform interpretation, which involves a risk of a breach of applicable regulations and related consequences, even if the breach of law is inadvertent. Furthermore, changes in regulations concerning operations of Supported Employment Enterprise or operations in special economic zones may result in significant expenditures to ensure compliance. Risk of operations in Ukraine The Company conducts operating activities in Uzhhorod, Ukraine through operations of the subsidiary Groclin Karpaty Sp. z o.o. The facility located in Uzhhorod has joint production floors of 17,500m2 and employs app. 300 people. The current unstable political situation in Ukraine, particularly potential negative development of events in the country may have an adverse impact on the possibility of producing covers in our facility. Apart from the operations of the facility, the possibility of transporting the products between our Polish facilities and the Ukrainian facility is crucial from the point of view of providing service to our customers. Moreover, the Company is one of the bidders for new contracts realized, among others, in car industry. The situation in Ukraine has a direct impact on the Group’s assessment concerning choosing the supplier. We cannot determine to what extent the current situation will affect the final choice of the supplier. A negative development of affairs in Ukraine may have an adverse future impact on our operating situation and financial results achieved. Currently, the facility in Uzhhorod operates without any disturbance.
Risk factors connected with the Group’s activities The order in which the following risk factors are presented does not reflect the likelihood of their occurrence, scope or significance of the risks. Risk connected with profitability levels Historically the Group’s operating results have been characterized by relatively low operating profit margin. The decline in revenue caused, among other things, by losing contracts or problems with their realization, drop of productivity, key customers’ pressure to lower the prices, or increase of operating expenses, the main components of which are the costs or raw materials and labor, may
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
lead to the loss of the Group’s ability to generate profits. Material adverse changes of profitability can lead to a decline in the value of our shares and limit our ability to generate working capital, significantly worsening our prospects. Risk connected with sales concentration Because of the characteristics of our activities and the industries of our customers, sale of Group’s products and services is possible only to a limited number of customers. It is connected with, among other things, the necessity to create long-term business relations and the large scale of the activities of the Group and its customers. Consolidation of hitherto customers of the Group may result in strengthening of their position in negotiations concerning the conditions of purchase of our products and services or result in the decision to change the supplier. These changes may have an adverse impact on operating results and financial standing of the Group. The aforementioned changes related to potential customers may significantly hinder winning new contracts in the future. Risk of changes of raw materials’ prices We are moderately exposed to risk of changes of prices of raw materials and energy, primarily in connection with the changing prices of copper. We purchase raw materials for production under framework agreements or in one-time transactions and do not hedge against raw materials’ prices fluctuations. A significant part of contracts with customers includes a mechanism of indexing sales prices of our products with a ratio related to copper prices in periods of three to six months, which results in respective delay of sales price changes. The Group does not additionally hedge against the risk of copper prices increase. A lasting significant increase in prices, particularly of copper, can have an adverse effect on the Group’s financial results. Risk of disturbance in production process Our Group has nine production facilities located in Poland, Ukraine and Germany, with production floors of 120,000 m2 in the aggregate. Any lasting disturbance of the production process can be caused by a number of factors, including an emergency failure, human errors, unavailability of raw materials, a natural disaster and other, which often are beyond our control. Any distortion, even relatively short, may have a material impact on our production and profitability, and may involve significant costs such as repair or liability towards customers, whose orders we are not able to carry out. Risk connected with indebtedness of the Group On 5th July 2013, Groclin and KTP concluded material loan agreements with Bank Zachodni WBK Spółka Akcyjna seated in Wrocław, Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna seated in Warsaw and mBank Spółka Akcyjna seated in Warsaw to ensure financing of the Group. New financing fully replaced previously existing loans of Group companies. First use of the loans was assigned to repayment of hitherto loan liabilities. Moreover, the Group received funds for financing of sales revenue growth and of additional investment property. In case sales revenue decreases, profitability worsens, significant operating problems occur or particular risks, as described in the hereby report, are realized, we may not be able to perform on-time repayments or refinance our debt on the grounds of bank loan agreements and/or lease agreements, and to keep the levels of financial ratios, as determined in these agreements, which depend on the financial results achieved by the Group. It may give rise to breaches of agreements. If an event of default occurs, it could lead in particular to bring our debt in state of maturity, banks’ control takeover of critical assets such as production facilities, credibility reduction and loss of access to external sources of financing, and consequently, loss of financial liquidity, which may have a material adverse effect on our business operations, development prospects and our stock prices. Risk of losing tax reliefs connected with operations in SEZ IGA Nowa Sól Sp. z o.o. operates in Kostrzyńsko-Słubicka Special Economic Zone. The company has got a permit for operation in SEZ until 31st December 2020. The permit depends on abiding by IGA Nowa Sól the principles of bills and regulations, and other conditions for the use of tax relief, including meeting defined criteria regarding level of employment. Changes in principles or
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
interpretations related to tax relief or IGA Nowa Sól’s breaching of permit conditions, under which the relief was granted, may result in losing the relief. Currently the company exercises the relief to a certain extent, therefore the risk of possible losing the relief would result in a limited impact on the financial results of the Group. The importance of operation in SEZ may increase if new contracts are assigned to Nowa Sól facility. IGA Nowa Sól benefits from a tax relief amounting to 50% of 2-year employment costs of the newly created jobs in the zone. In the period of 1st June 2005 – 31st May 2007, the subsidiary IGA Nowa Sól incurred qualified employment costs in Kostrzyńsko-Słubicka SEZ in the amount of PLN 8,278 thousand, 50% of which constitutes the amount of possible tax relief. The amount of state subsidies utilized thereof until 30th September 2014 amounted to PLN 600 thousand. On 23rd June 2014, the subsidiary Kabel-Technik-Polska Sp. z o.o. received permit no 267 to conduct business activities in Kostrzyńsko-Słubicka SEZ. The conditions to conduct business activities are: performing capital expenditures for investment purposes in the area of the SEZ in the amount of no less than PLN 2,700,000.00 and reaching employment of no less than 150 employees until 31st August 2015. This number of employees shall be maintained until 31st August 2020. Kabel-Technik-Polska Sp. z o.o. will benefit from a tax relief amounting to 50% of 2-year employment costs of the newly created jobs in the zone. The start of the investment on Kostrzyńsko-Słubicka SEZ is scheduled after 1st November 2014. Risk of losing the status of Supported Employment Enterprise Groclin S.A. and Groclin Service Sp. z o.o. have the status of a Supported Employment Enterprise, as they fulfill the conditions set by Social and Vocational Rehabilitation and Employment of Disabled Act. The status provides the companies with several benefits which allow reducing operating cost. A possible change of principles thereof may influence the level of benefits achieved. Moreover, the companies might lose the status of Supported Employment Enterprise in case they did not meet the requirements under aforementioned Act. Losing the status could have a material adverse impact on the financial results of the Group. In three quarters of 2014, Groclin S.A. and Groclin Service Sp. z o.o. received subsidies for salaries of employees with disabilities in the amount of PLN 9,409 thousand and refund of employees transportation costs (State Fund for Rehabilitation of Disabled Persons) in the amount of PLN 540 thousand. Risk connected with the Company’s ability to pay dividend The Company is a parent entity for other operating units (production facilities) of the Group, thus its ability to pay dividend depends on the level of distributions it receives from operational subsidiaries and the level of its cash balances. Some of the Group’s subsidiaries conducting operating activity may in certain periods be subject to limitations concerning distributions to the Issuer. It is not certain that such limitations will not have an adverse effect on the Group’s ability to pay dividend. Moreover, by the power of the loan agreement concluded on 5th July 2013 with mBank S.A., the payment of dividend requires prior bank’s consent.
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Supplementary information Management Board’s position on the possibility to achieve the projected financial results published earlier On 15th May 2014, in current report no 18, the Management Board of the Issuer published an adjustment to the forecast of financial results projected for 2014. The Company presented the following financial results forecast: consolidated sales revenue PLN 450-500 million (not changed), EBITDA PLN 30-32 million (reduced by 18%). As on the day of publishing of the hereby report, the Management Board maintains the forecast of financial results as published in current report no 18 on 15th May 2014.
Changes in managing and supervising bodies of Groclin S.A. On 30th April 2014, Mr. Zbigniew Drzymała resigned from being the President of the Management Board of Groclin S.A. with immediate effect (current report no 15/2014). On 30th April 2014, the Supervisory Board of the Company, as an acknowledgement of Mr. Zbigniew Drzymała’s services for the founding and hitherto operations of the Company, granted Mr. Zbigniew Drzymała with the title of “the Honorary President of the Management Board – the Founder of the Company”. On the same day, the Supervisory Board appointed Mr. André Gerstner, the hitherto Vice-President of the Management Board of the Company, as the President of the Management Board. Simultaneously, the Supervisory Board decided that Mr. Michał Bartkowiak, the current Chief Financial and Personnel Officer, shall become the Vice-President of the Management Board a.i. On 26th August 2014, Mr. Michał Bartkowiak resigned from being the Vice-President of the Management Board of Groclin S.A. with the effect on 27th August 2014 (current report no 39/2014). On 30th May 2014, the Ordinary Shareholders Meeting of the Issuer appointed the hitherto members of the Supervisory Board: Mr. Waldemar Frąckowiak, Mr. Piotr Gałązka, Mr. Janusz Brzeziński, Mr. Wojciech Witkowski, Mr. Wilfried Gerstner, Mr. Mike Gerstner, and Mr. Jörg-H. Hornig to continue their service in the Supervisory Board. Mr. Waldemar Frąckowiak was appointed as the Chairman of the Supervisory Board. According to the resolution no 42 adopted by the Ordinary Shareholders Meeting of the Issuer on 30th May 2014, on 8th July 2014, that is the day of registration of the changes in the Articles of Association of Groclin S.A. in the commercial register of National Court Register, which were introduced by resolution no 41 dated 30th May 2014 of the Ordinary Shareholders Meeting (limiting the number of members of the Supervisory Board to five persons), Mr. Janusz Brzeziński, Mr. Wojciech Witkowski and Mr. Wilfried Gerstner were dismissed from being a Member of the Supervisory Board, while Mrs. Maria Drzymała was appointed as a Member of the Supervisory Board (current report no 37/2014). On 1st October 2014, Mr. Waldemar Frąckowiak resigned from being a member of the Supervisory Board and serving as the Chairman of the Supervisory Board of the Issuer with immediate effect (current report no 45/2014). On 13th October 2014, Mrs. Maria Drzymała resigned from being a member of the Supervisory Board with the effect on 13th October 2014 (current report no 49/2014). On 4th November 2014, Extraordinary Shareholders Meeting of the Issuer appointed Mr. Wilfried Gerstner and Mr. Michał Głowacki as Members of the Supervisory Board. On 4th November 2014, by the power of resolution no 15/2014, The Supervisory Board of
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Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Groclin S.A. appointed Mr. Piotr Gałązka as the Chairman of the Supervisory Board of Groclin S.A. and, by the power of resolution no 16/2014, appointed Mr. Michał Głowacki as the Vice-President of the Supervisory Board of Groclin S.A. (current report 55/2014).
Statement of the Issuer’s shareholding or rights to shares of managing and supervising personnel
Managing and supervising personnel Management Board André Gerstner
Number of shares or rights thereto
Number of shares or rights thereto
as at 13/11/2014
as at 28/08/2014
Change
-
-
-
N/A -
-
-
Mike Gerstner Jörg-H. Hornig
-
-
-
Maria Drzymała Wilfried Gerstner
N/A -
Michał Głowacki
-
Supervisory Board Waldemar Frąckowiak Piotr Gałązka
1.474.760 N/A
-
N/A
-
Information on guarantees As on 30th September 2014, the Group did not guarantee nor issued any guarantee in favor of another entity.
Significant off-balance items As on 30th September 2014, there are promissory notes’ liabilities which guarantee for lease agreements, insurances and financing, as well as guarantees on assets of particular Group companies in connection with concluded agreements, including loan agreements and lease agreements. Promissory notes issued by Groclin S.A.: Agency agreement no 21/4000/09 dated 1st December 2009 - blank promissory note together with promissory note declaration Lease agreement no 501456-EB-0 - blank promissory note together with promissory note declaration Lease agreement no 501900-EB-0 - blank promissory note together with promissory note declaration Lease agreement no IGA/SZ/173045/2014 - blank promissory note together with promissory note declaration Lease agreement no B/O/PZ/2013/11/ 0067 - blank promissory note together with promissory note declaration Lease agreement no L/O/PZ/2014/03/ 0060 - blank promissory note together with promissory note declaration PFRON (State Fund for Rehabilitation of Disabled) agreement no RDK/000020/15/D dated 15th September 2009 blank promissory note together with promissory note declaration PFRON (State Fund for Rehabilitation of Disabled) agreement no RDK/000068/15/D dated 12th March 2010 blank promissory note together with promissory note declaration PFRON (State Fund for Rehabilitation of Disabled) agreement no RDK/000119/15/D dated 20th March 2012 blank promissory note together with promissory note declaration PFRON (State Fund for Rehabilitation of Disabled) agreement no RDK/000155/15/D dated 27th March 2013 blank promissory note together with promissory note declaration Agreement of insurance of customs duties - blank promissory note together with promissory note declaration
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Promissory notes issued by Kabel-Technik-Polska Sp. z o.o.: Framework Agreement 4098/06 - promissory note Lease agreement no KABEL/SZ/126100/2011 - promissory note together with promissory note declaration ZAB/130956/11/80162970 Lease agreement no KABEL/SZ/126101/2011 - promissory note together with promissory note declaration ZAB/130962/11/80162970 Lease agreement no KABEL/SZ/138947/2012 - promissory note together with promissory note declaration ZAB/147403/12/80162970 Lease agreement no KABEL/SZ/140631/2012 - promissory note together with promissory note declaration ZAB/149667/12/8 0162970 Lease agreement no KABEL/SZ/141061/2012 - promissory note together with promissory note declaration ZAB/150485/12/80162970 Lease agreement no KABEL/SZ/141704/2012 - promissory note together with promissory note declaration ZAB/151318/12/80162970 Lease agreement no KABEL/SZ/142798/2012 - promissory note together with promissory note declaration ZAB/153108/12/80162970 Lease agreement no KABEL/SZ/143446/2012 - promissory note together with promissory note declaration ZAB/154140/12/80162970 Lease agreement no KABEL/SZ/143445/2012 - promissory note together with promissory note declaration ZAB/154141/12/80162970 Lease agreement no KABEL/SZ/153147/2013 - blank promissory note together with promissory note declaration ZAB/170446/13/80162970 Lease agreement no KABEL/SZ/153146/2013 - blank promissory note together with promissory note declaration ZAB/170445/13/80162970 Lease agreement no 500343-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 500417-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 500437-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 500480-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 501047-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 501114-EB-0 - blank promissory note together with promissory note declaration Lease agreement no 501417-EB-0 - blank promissory note together with promissory note declaration
Promissory notes issued by IGA Nowa Sól: Agreement on Project Financing no 14/DPW/2006 dated 21st December 2006 (as amended) - blank promissory note together with promissory note declaration
Summary of mortgages on real estate of Groclin, KTP, IGA Nowa Sól and Groclin Service as guarantees of Groclin’s loans:
type
amount
entity entitled
land register no PO1S/00027863/8, PO1S/00041536/1, PO1S/00046994/4,
contractual joint mortgage
23 158 EUR thousand
PKO BP working capital loan
contractual joint mortgage
23 158 EUR thousand
PKO BP investment loan
PO1S/00004348/5, PO1S/00007918/3, PO1S/00028069/9, PO1S/00034687/2, PO1S/00044571/9, PO1S/00040272/5, PO1S/00027873/1, PO1S/00033712/0, PO1E/00025891/6,
contractual joint mortgage
24 750 EUR thousand
BZ WBK working capital loan
PO1E/00034694/1, PO1E/00036966/3, PO1E/00037105/7, PO1S/00039719/1, PO1S/00040241/9, PO1S/00028528/5, PO1S/00047285/8, PO1S/00033993/3, PO1S/00046327/8, PO1S/00006547/4, PO1S/00004209/9 KO1D/00017073/1, KO1D/00018313/3, KO1D/00030338/4, KO1D/00030340/1,
contractual joint mortgage
25 500 EUR thousand
BRE BANK working capital loan
contractual joint mortgage
25 500 EUR thousand
BRE BANK investment loan
KO1D/00030341/8, KO1D/00030342/5, KO1D/00018311/9, KO1D/00030399/1, KO1D/00032104/9; ZG1N/00058057/0, ZG1N/00054415/0, ZG1N/00054447/3
Groclin Capital Group
Page 33 of 79
Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Summary of mortgages on real estate of KTP as guarantees of KTP loans: type
amount
entity entitled
CONTRACTUAL JOINT ORDINARY MORTGAGE An application has been filed to cancel the mortgage
EUR 1 000 thousand
KO1D/00017073/1 KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00030338/4
CONTRACTUAL JOINT CAPPED MORTGAGE An application has been filed to cancel the mortgage
BRE BANK SA – loan granted in the agreement no 08/169/10/D/IN
land register no KO1D/00018313/3
EUR 200 thousand
BRE BANK SA SEATED IN WARSAW, SZCZECIN
KO1D/00018313/3 KO1D/00017073/1
BRANCH - interest and commissions as well as bank proceeding expenses on loan granted in the agreement no 08/169/10/D/IN
KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00030338/4
CONTRACTUAL JOINT MORTGAGE An application has been filed to cancel the mortgage
KO1D/00018313/3 EUR 12 075 thousand
BRE BANK SA SEATED IN WARSAW, SZCZECIN BRANCH – Partnership Agreement I no 08/209/06/D/PX dated 30th August 2006
KO1D/00017073/1 KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00030338/4 KO1D/00017073/1
CONTRACTUAL JOINT MORTGAGE
EUR 25 500 thousand
BRE BANK SA SEATED IN WARSAW, SZCZECIN BRANCH – agreement for multiproduct line for the group
KO1D/00018313/3
of related entities “Umbrella Wieloproduktowa” no 08/060/13/D/UX dated 05th July 2013. AGREEMENT FOR INVESTMENT LOAN IN EUR No
KO1D/00030340/1
08/061/13/D/IN dated 05th Jully 2013
KO1D/00018311/9
KO1D/00030338/4 KO1D/00030341/8 KO1D/00030342/5 KO1D/00032104/9 KO1D/00030339/1
CONTRACTUAL JOINT MORTGAGE
EUR 23 158 thousand
POWSZECHNA KASA OSZCZĘDNOŚCI BANK POLSKI SPÓŁKA AKCYJNA, WESTERN
KO1D/00017073/1
REGIONAL CORPORATE BRANCH IN POZNAŃ – agreement for investment loan no 62102040270000159602094803 dated 05th July 2013 and
KO1D/00030338/4
amended by the annex no 1 dated 05th July 2013 and the annex no 3 dated 16th September 2013 roku, loan agreement in the form of multipurpose credit limit no 49102040270000100211654680 dated 05th July 2013 amended by the annex no 2 dated 16th September 2013
BANK ZACHODNI WBK SPÓŁKA AKCYJNA –
CONTRACTUAL JOINT
EUR 24 750
MORTGAGE
thousand
KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00018311/9 KO1D/00032104/9 KO1D/00030339/1 KO1D/00017073/1
agreement for multipurpose and multicurrency credit line no K00015/13 dated 05th July 2013, agreement for
KO1D/00018313/3
currency investment loan no K00016/13 dated 05th July 2013 roku, interest rate swap agreement IRS, which shall be concluded under the framework agreement on
KO1D/00030340/1
the course of conclusion and settlement of the transaction dated 05th July 2013 for the purpose of interest rate
KO1D/00018311/9
volatility guarantee concerning the investment loan
Groclin Capital Group
KO1D/00018313/3
KO1D/00030338/4 KO1D/00030341/8 KO1D/00030342/5 KO1D/00032104/9 KO1D/00030339/1
Page 34 of 79
Consolidated quarterly report for the third quarter of 2014 Management Board’s report on the operations of Groclin Capital Group
Free-of-charge land easement, meaning unrestricted carriage and passage through land parcel no 502/3 (as described in the land register no KO1D/00017073/1), to hydrophore plant in the land parcel no 502/8, constituted in favor of owners from time to time (perpetual user) of the land parcel no 502/8, which was divided to land
KO1D/00017073/1
parcel no 502/41 (described in the land register no KO1D/00018312/6) and 502/42 (described in the land register no KO1D/00018311/9).
free-of-charge and unlimited in tme transmission easement in the land parcel no 8/9, consisting in: 1) right to use a real estate encumbered to the extent necessary for future foundation of electric device of a electroenergetic cable SN 15KV together with a connector 15 KV; 2) tolerating the existence of devices founded in the parcel as mentioned in item 1 after their foundation; 3) right to use the encumbered parcel to the extent necessary for performance of maintenance, repairs,
KO1D/00032104/9
upgrades, removal of failures, and reconstruction of electroenergetic devices and installation as mentioned in items 1 and 2, together with the right to enter the parcel with the appropriate machines for the employees of the energetic company and all other entities and persons with whom the energetic company cooperates in connection with its operations.
Information on court and arbitration proceedings and proceedings pending before public administrative authorities During the period covered by this report, Groclin S.A. and its subsidiaries were not a party to any proceedings pending before a court, arbitration or public administrative authority, the unit or joint value of which would equal to or exceed 10% of the Company’s equity.
Information on transactions with related parties executed on non-market terms and conditions During the period covered by this report, Groclin S.A. and its subsidiaries did not execute any significant transactions with related entities on non-market terms and conditions.
Signatures of the Management Board’s Members
Position
Name and surname
Date
President of the Management Board
André Gerstner
13 November 2014
Groclin Capital Group
Signature
Page 35 of 79
Condensed quarterly consolidated financial statements for the nine months period ended 30th September 2014
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Table of contents Condensed quarterly consolidated financial statements for the nine months’ period ended 30th September 2014 36 Consolidated financial statements and selected financial data ........................................................................................................ 38 Selected consolidated financial data .............................................................................................................................................. 38 Consolidated statement of comprehensive income ........................................................................................................................ 39 Consolidated report on financial situation ....................................................................................................................................... 41 Consolidated cash flow statement ................................................................................................................................................. 42 Consolidated statement of changes in equity ................................................................................................................................. 43 Standalone financial statements and selected financial data ........................................................................................................... 46 Selected standalone financial data ................................................................................................................................................. 46 Standalone statement of comprehensive income ........................................................................................................................... 47 Standalone report on financial situation .......................................................................................................................................... 49 Standalone cash flow statement .................................................................................................................................................... 50 Standalone statement of changes in equity .................................................................................................................................... 51 Additional explanatory notes .......................................................................................................................................................... 54 1. General information ............................................................................................................................................................... 54 2. Composition of the Group ..................................................................................................................................................... 56 3. Management and supervisory bodies .................................................................................................................................... 58 4. Approval of the financial statements ...................................................................................................................................... 59 5. Basis of preparation of consolidated financial statements....................................................................................................... 59 6. Significant accounting policies ............................................................................................................................................... 60 7. Business seasonality ............................................................................................................................................................. 64 8. Information concerning business segments ........................................................................................................................... 64 9. Dividend paid and proposed.................................................................................................................................................. 67 10. Earnings per share ................................................................................................................................................................ 67 11. Interest-bearing loans and borrowings ................................................................................................................................... 68 12. Equity securities .................................................................................................................................................................... 69 13. Acquisition of SeaTcon Group ............................................................................................................................................... 69 14. Significant changes in balance sheet items ............................................................................................................................ 71 15. Financial instruments ............................................................................................................................................................. 72 16. Capital management ............................................................................................................................................................. 73 17. Contingent liabilities and contingent assets ............................................................................................................................ 73 18. Grants and operations in Special Economic Zone .................................................................................................................. 76 19. Significant events after balance sheet date ............................................................................................................................ 77
Groclin Capital Group
Page 37 of 79
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Consolidated financial statements and selected financial data Selected consolidated financial data For the period from 01.01.2014 to 30.09.2014 thousand PLN
For the period from 01.01.2013 to 30.09.2013 thousand PLN
For the period from 01.01.2014 to 30.09.2014 thousand EUR
For the period from 01.01.2013 to 30.09.2013 thousand EUR
336 989 (1 560)
189 116 52 283
80 699 (374)
45 010 12 444
Profit (loss) before tax Profit (loss) from continuing operations
(7 682) (4 449)
49 973 48 788
(1 840) (1 065)
11 894 11 612
Profit (loss) for the period
(4 449)
48 788
(1 065)
11 612
Profit (loss) for the period attributable to equity holders of the parent
(4 449)
48 788
(1 065)
11 612
(13 919) (10 748) 24 974
(33 036) (4 480) 39 586
(3 333) (2 574) 5 980
(7 863) (1 066) 9 422
306
2 070
73
493
11 577 873 11 577 873 (0,38) (0,38)
8 120 152 8 120 152 6,01 6,01
11 577 873 11 577 873 (0,09) (0,09)
8 120 152 8 120 152 1,43 1,43
4,1759
4,2016
As at
As at
Revenues Operating profit (loss)
Net operating cash flow Net investment cash flow Net financial cash flow Net change in cash and cash equivalents Weighted average number of shares Weighted average diluted number of shares EPS (in PLN/EUR) Diluted EPS (in PLN/EUR) Average PLN/EUR rate*
As at
As at
30 September 2014 31 December 2013 thousand PLN thousand PLN Assets Long-term liabilities Short-term liabilities Equity Share capital
30 September 2014 31 December 2013 thousand EUR thousand EUR
437 865 148 587 148 081 141 196 11 578
443 196 165 425 114 408 163 363 11 578
104 865 35 585 35 464 33 815 2 773
106 866 39 888 27 587 39 391 2 792
11 577 873 11 577 873 12,20 12,20
11 577 873 11 577 873 14,11 14,11
11 577 873 11 577 873 2,92 2,92
11 577 873 11 577 873 3,40 3,40
Declared or paid dividend (in PLN/EUR) Declared or paid dividend per share (in PLN/EUR)
-
-
-
PLN/EUR rate at the end of the period**
-
-
4,1755
Number of shares Diluted number of shares Book value per share (in PLN/EUR) Diluted book value per share (in PLN/EUR)
4,1472
* - Items of the income statement and the cash flow statement are converted at the exchange rate, which is the arithmetic mean of average rates announced by the NBP during the period to which presented data relates. ** - Items of balance sheet and book value per share were converted at the average exchange rate announced by the NBP and prevailing at the balance sheet date.
Groclin Capital Group
Page 38 of 79
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Consolidated statement of comprehensive income 3 months period ended 30 September 2014 (unaudited) Continuing operations Sales of products and services Sales of materials and goods Revenues Cost of sales for products and services
9 months period ended
3 months period ended
9 months period ended
Year ended 31 December
30 September 2014 30 September 2013 30 September 2013 (unaudited) (revised) (revised)
2013 (audited)
109 708
334 490
94 720
187 371
282 533
1 225
2 499
582
1 745
2 865
110 932
336 989
95 302
189 116
285 398
(101 207)
(311 310)
(80 663)
(160 650)
(269 492)
Cost of sales for materials and goods
(167)
(891)
(694)
(1 352)
(2 057)
Gross profit (loss) on sales
9 558
24 788
13 945
27 114
13 849
Selling and distribution expenses
(2 135)
(5 956)
(1 289)
(3 038)
(4 355)
Administrative expenses
(9 543)
(28 430)
(9 323)
(17 721)
(28 820)
Profit (loss) on sales
(2 119)
(9 598)
3 333
6 355
(19 326)
Other operating income
1 144
2 319
604
994
1 065
Profit on bargain purchase Other operating expenses
(339)
6 989 (1 270)
(309)
45 277 (343)
45 277 (1 853)
Operating profit / (loss)
(1 314)
(1 560)
3 628
52 283
25 163
Finance income Finance costs Profit / (loss) before tax
226 (2 196) (3 284)
360 (6 482) (7 682)
146 (1 810) 1 964
1 487 (3 797) 49 973
3 462 (4 176) 24 449
1 281
3 233
(311)
(1 185)
6 127
(2 003)
(4 449)
1 653
48 788
30 576
-
-
-
-
-
Net profit (loss) for the period
(2 003)
(4 449)
1 653
48 788
30 576
Attributable to: Equity holders of the parent Non-controlling interest
(2 003) -
(4 449) -
1 653 -
48 788 -
30 576 -
(2 003)
(4 449)
1 653
48 788
30 576
(0,17)
(0,38)
0,14
6,01
3,40
attributable to equity holders of the parent – diluted from the profit (loss) for the period attributable to equity holders of the parent – diluted from the profit (loss) from the continuing
(0,17)
(0,38)
0,14
6,01
3,40
(0,17)
(0,38)
0,14
6,01
3,40
operations attributable to equity holders of the parent
(0,17)
(0,38)
0,14
6,01
3,40
Income tax Net profit (loss) for the period from continuing operations Discontinued operations Profit (loss) for the period from discontinued operations
Earnings per share: – basic from the profit (loss) for the period attributable to equity holders of the parent – basic from the profit (loss) from continuing operations
Groclin Capital Group
Page 39 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Consolidated statement of comprehensive income (continued)
Note
Net profit / (loss) for the period
3 months period ended
9 months period ended
3 months period ended
9 months period ended
30 September 2014 (unaudited)
30 September 2014 (unaudited)
Year ended
30 September 2013 30 September 2013 (revised) (revised)
31 December 2013 (audited)
(2 003)
(4 449)
1 653
48 788
30 576
1 368 (965)
2 511 (20 552)
(386) -
566 -
224 (6 564)
-
-
-
-
(39)
Other comprehensive income Amounts that may be trasferred to income statement in following periods Exchange difference on translation from funcional currency to presentation currency Exchange difference on translation of foreign operations Deferred tax on other comprehensive income Amounts that may not be trasferred to income statement in following periods Actuarial gains/(losses) on defined benefits programs Deferred tax on actuarial gains/(losses) Other comprehensive income
7 403
(18 042)
(386)
566
(6 372)
Total comprehensive income
(1 600)
(22 491)
1 267
49 354
24 204
Total comprehensive income by: Holders of the parent
(1 601)
(22 494)
1 267
49 354
24 204
1
3
-
-
-
Holders of the non-controling interest
Groclin Capital Group
Page 40 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Consolidated report on financial situation As at
As at
As at
As at
30 September 2014
30 June 2014
31 December 2013
30 September 2013
(unaudited)
(reviewed)
(audited)
(revised)
ASSETS Non-current assets Intangible assets Property, plant and equipment Receivables (longterm) Other financial assets Other non-financial assets
64 821
63 016
44 572
45 611
201 046
203 007
236 031
242 152
335
334
333
455
2 906
2 940
3 197
3 203
-
-
-
-
4 468
3 064
2 551
8
273 576
272 360
286 684
291 429
Inventories
61 165
66 193
55 339
70 180
Trade receivables
86 778
96 000
69 491
84 384
Other receivables
1 508
671
752
6 663
322
322
3 350
474
66
59
101
-
6 067 8 383
6 428 1 998
20 107 7 372
1 553 2 129
164 289
171 671
156 512
165 383
-
3 620
-
-
437 865
447 651
443 196
456 812
Deferred tax asset Current assets
Income tax receivables Other financial assets Other non-financial assets Cash and cash equivalents Non-current assets held for sale TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital
11 578
11 578
11 578
11 578
Share premium Reserve capital
222 759 16 762
222 760 16 762
231 240 16 762
231 240 16 762
Foreign currency translation reserve
(25 612)
(26 014)
(7 568)
(662)
Retained earnings / Accumulated losses
(84 597)
(82 614)
(88 649)
(70 405)
Attributable to equityholders of the parent
140 890
142 471
163 363
188 513
306
366
-
-
141 196
142 837
163 363
188 513
121 652
114 500
140 198
76 538
5 290
5 402
6 118
5 635
854
856
852
503
4 454
4 418
2 785
4 818
Non-controling interest Total equity Non-current liabilities Longterm loans and borrowings Liabilities on lease contracts and other financial liabilities Employee benefits Provisions Longterm deferred income Deferred tax liabilities
72
71
72
99
16 264
16 501
15 400
19 621
148 587
141 749
165 425
107 214
70 489
64 692
14 925
83 067
7 940
8 886
9 253
6 184
56 546
72 844
55 399
50 170
Current liabilities Short-term loans and borrowings Liabilities on lease contracts and other financial liabilities Trade payables Income tax payable
325
-
-
-
Other non-financial liabilities Employee benefits
9 407 2 258
12 927 2 622
29 054 2 283
17 924 3 133
Provisions
1 089
1 066
3 466
579
27
28
28
28
148 081
163 065
114 408
161 085
TOTAL LIABILITIES
296 668
304 813
279 833
268 299
TOTAL EQUITY AND LIABILITIES
437 865
447 651
443 196
456 812
Short-term deferred income
Groclin Capital Group
Page 41 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Consolidated cash flow statement
3 months
9 months
3 months
9 months
period ended period ended period ended period ended Period ended 30 September 2014 30 September 2014 30 September 2013 30 September 2013 31 December 2013 (unaudited)
(unaudited)
(revised)
(revised)
(audited)
(3 284)
(7 682)
1 964
49 973
24 449
Adjustments for: Amortization and depreciation Foreign exchange differences
4 200 (10)
20 425 (201)
3 011 (348)
5 259 289
8 990 (4 248)
Net interest and shares in profits Gain/loss from investing activities
1 499 (167)
4 014 (235)
1 051 3
2 220 26
2 721 (3 287)
Increase / decrease in trade and other receivables Increase / decrease in inventories Increase / decrease in trade and other payables except for loans and
9 539 5 294
4 055 (1 849)
(13 633) (2 759)
(13 172) (15 333)
(7 435) (1 786)
(20 956) (313)
(26 712) (81)
(14 086) 3
(7 809) (4)
13 967 (27)
Cash flow from operating activities Profit (loss) before taxation
borrowings, liabilities on lease contracts, factoring and dividends Change in prepayments and deferred income Change in provisions and employees benefits
(333)
(2 897)
(4 453)
(5 298)
1 860
Income tax received/(paid)
(40)
3 762
2 573
888
(2 581)
Profit on bargain purchase Other (including forward transactions)
429
(6 989) 471
(4 800)
(45 277) (4 798)
(45 277) (9 660)
(4 143)
(13 919)
(31 474)
(33 036)
(22 314)
3 976 (3 630) (206)
4 195 (13 707) (205)
5 (6 099) -
948 (8 947) -
1 340 (5 489) 2 940
-
(1 335)
-
3 120 -
3 120 -
(0) 45
209 95
399
399
52
185
(10 748)
(5 695)
(4 480)
1 963
Repayment of finance lease liabilities Proceeds from loans, borrowings
(687) 14 239
(1 930) 51 769
(580) 150 508
(1 854) 160 724
(3 144) 156 350
Repayment of loans, borrowings Interest paid Dividends paid
(1 922) (1 499) -
(20 810) (4 014) -
(114 156) (531) (1 122)
(116 463) (1 699) (1 122)
(115 160) (3 527) (323)
(40) -
(40) -
-
-
(6 536)
10 092
24 974
34 119
39 586
27 660
Net cash flow from operating activities Cash flow from investing activities Proceeds from sale of property, plant and equipment and intangible asstes Purchase of property, plant and equipment and intangible assets Proceeds/Payments from forward transactions Proceeds on transaction with IGA Acquisition of subsidiaries Proceeds from granted loans Other investing inflows and outflows Net cash flow from investing activities Cash flow from financing activities
Acquisition of shares from non-controlling interest Proceeds (payments) on factoring of receivables Net cash flow from financing activities Net increase/(decrease) in cash and cash equivalents
6 134
306
(3 050)
2 070
7 309
Net foreign exchange differences Cash and cash equivalents at the beginning of the period
251 1 998
705 7 372
(5) 5 184
(5) 64
63
Cash and cash equivalents at the end of the period
8 383
8 383
2 129
2 129
7 372
Groclin Capital Group
Page 42 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Consolidated statement of changes in equity Attributable to shareholders of the parent entity
Retained earnings / Accumulated Reserve capital losses
Share capital
Share premium
Translation reserve
Total
Non-controlling interest
Total equity
As at 1 January 2014
11 578
231 240
16 762
(88 649)
(7 568)
163 363
-
163 363
Net profit for the period
-
-
-
(4 449)
-
(4 449)
-
(4 449)
Other comprehansive income Total comprehensive income
-
-
-
(4 449)
(18 044) (18 044)
(18 044) (22 494)
3 3
(18 042) (22 491)
Non-controlling interest related to acquisition of subsidiary
-
-
-
-
-
-
364
364
(8 481) ########## #########
16 762,0000000 €-
21 8 481 #ADR! -25 612,3788052 €-
21 -
(61) 2,7337338 €-
(40) -
140 890
306
141 196
Acquisition of shares in subsidiaries fromnoncontrolling interest Lossatcoverage (Grolin S.A.) As 31 December 2009 (unaudited) As at 30 September 2014 (unaudited)
11 578
222 759
16 762
(84 597)
(25 612)
Groclin Capital Group
Page 43 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Attributable to shareholders of the parent entity
Retained earnings /
As at 1 January 2013 Net profit for the period Other comprehansive income Total comprehensive income Settlement of purchases of shares in KTP Profit distribution /dividend payment (KTP) Profit distribution As at 30 September 2013 (revised)
Share capital
Share premium
Reserve capital
Accumulated losses
Translation reserve
Total
Non-controlling interest
Total equity
4 104 -
14 453 -
-
(1 711) 48 788 -
(1 228) 566
15 618 48 788 566
-
15 618 48 788 566
-
-
-
48 788
566
49 354
-
49 354 -
7 474 -
213 151 -
16 762 -
(112 757) (1 089)
-
124 630 (1 089)
-
124 630 (1 089)
662,0000000 € (662)
-
- € -
-
3 636 ##########- ######### 11 578 231 240
(3 636)€ 16 762,0000000 €- -70 405,0000000 16 762 (70 405)
188 513
Groclin Capital Group
188 513
Page 44 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Attributable to shareholders of the parent entity Retained earnings / Accumulated
Translation
Reserve capital
losses
reserve
Total
interest
Total equity
14 453 -
-
(1 711) 30 576
(1 228) -
15 618 30 576
-
15 618 30 576
-
-
-
(32)
(6 340)
(6 372)
-
(6 372)
-
-
-
30 544
(6 340)
24 204
-
24 204
Share
Share
capital
premium
4 104 -
Other comprehansive income Total comprehensive income
As at 1 January 2013 Net profit for the period
Non-controlling
Settlement of purchases of shares in KTP
7 474
213 151
16 762
(112 757)
-
124 630
-
124 630
Profit distribution /dividend payment (KTP) Profit As at distribution 31 December 2009 (unaudited)
11 578-
3 636 231 240
16 762-
(1 089) (3 649) 636) (88
(7 568)-
(1 089) -
--
(1 089) -
As at 31 December 2013 (audited)
11 578
231 240
16 762
(88 649)
(7 568)
163 363
-
163 363
Groclin Capital Group
Page 45 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Standalone financial statements and selected financial data Selected standalone financial data For the period
For the period
For the period
For the period
from 01.01.2014 to 31.09.2014
from 01.01.2013 to 31.09.2013
from 01.01.2014 to 31.09.2014
from 01.01.2013 to 31.09.2013
thousand PLN
thousand PLN7
thousand EUR
thousand EUR
193 407 (5 149)
126 442 2 194
46 315 (1 233)
30 094 522
Profit (loss) before tax Profit (loss) from continuing operations
(5 547) (3 089)
429 254
(1 328) (740)
102 60
Profit (loss) for the period
(3 089)
254
(740)
60
Net operating cash flow Net investing cash flows
(7 635) (8 684)
(9 257) (29 641)
(1 828) (2 080)
(2 203) (7 055)
Net financing cash flows
16 075
34 281
3 850
8 159
(244)
(4 617)
(58)
(1 099)
Weighted average number of shares
11 577 873
7 748 590
11 577 873
7 748 590
Weighted average diluted number of shares EPS (in PLN/EUR)
11 577 873 (0,27)
7 748 590 0,03
11 577 873 (0,06)
7 748 590 0,01
(0,27)
0,03
(0,06)
0,01
4,1759
4,2016
Revenues Operating profit (loss)
Net change in cash and cash equivalents
Diluted EPS (in PLN/EUR) Average PLN/EUR rate*
As at As at As at As at 30 September 2014 31 December 2013 30 September 2014 31 December 2013 thousand PLN
thousand PLN
thousand EUR
thousand EUR
490 818
464 776
117 547
112 070
71 608 95 033
86 136 53 435
17 149 22 760
20 770 12 885
324 178 11 578
325 205 11 578
77 638 2 773
78 416 2 792
Number of shares
11 577 873
11 577 873
11 577 873
11 577 873
Diluted number of shares Book value per share (in PLN/EUR)
11 577 873 28,00
11 577 873 28,09
11 577 873 6,71
11 577 873 6,77
28,00
28,09
6,71
6,77
Declared or paid dividend (in PLN/EUR)
-
-
-
-
Declared or paid dividend per share (in PLN/EUR)
-
-
-
-
PLN/EUR rate at the end of the period**
-
-
4,1755
Assets Long-term liabilities Short-term liabilities Equity Share capital
Diluted book value per share (in PLN/EUR)
4,1472
* - Items of the income statement and the cash flow statement are converted at the exchange rate, which is the arithmetic mean of average rates announced by the NBP during the period to which presented data relates. ** - Items of balance sheet and book value per share were converted at the average exchange rate announced by the NBP and prevailing at the balance sheet date.
Groclin Capital Group
Page 46 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Standalone statement of comprehensive income 3 months
9 months
3 months
9 months
period ended 30 September
period ended 30 September
period ended 30 September
period ended 30 September
Year ended 31 December
2014 (unaudited)
2014 (unaudited)
2013 (unaudited)
2013 (unaudited)
2013 (audited)
Continuing operations Sales of products and services
36 987
118 155
18 155
42 864
65 379
Sales of materials and goods
23 527
75 251
24 817
83 578
105 024
Revenues
60 514
193 407
42 972
126 442
170 403
(35 662) (17 781)
(120 151) (59 625)
(18 406) (21 126)
(42 855) (72 642)
(73 249) (90 550)
7 071
13 630
3 440
10 945
6 604
(1 996) (4 317)
(5 346) (13 923)
(156) (3 784)
(516) (10 677)
(724) (15 088)
759
(5 639)
(500)
(248)
(9 208)
Other operating income Other operating expenses
765 (379)
1 600 (1 111)
299 (353)
3 291 (849)
2 997 (3 251)
Operating profit / (loss)
1 145
(5 149)
(554)
2 194
(9 462)
Cost of sales for products and services Cost of sales for materials and goods Gross profit (loss) on sales Selling and distribution expenses Administrative expenses Profit (loss) on sales
Financial income
877
2 350
2
9
1 054
(1 226)
(2 748)
1 009
(1 774)
(2 359)
796
(5 547)
457
429
(10 767)
Income tax
1 330
2 458
(291)
(175)
2 286
Net profit (loss) for the period from continuing operations
2 126
(3 089)
166
254
(8 481)
Discontinued operations
-
-
-
-
-
Profit (loss) for the period from discontinued operations
-
-
-
-
-
2 126
(3 089)
166
254
(8 481)
– basic from the profit (loss) for the period
0,18
(0,27)
0,01
0,03
(1,00)
– basic from the profit (loss) from continuing operations
0,18
(0,27)
0,01
0,03
(1,00)
– diluted from the profit (loss) for the period
0,18
(0,27)
0,01
0,03
(1,00)
operations
0,18
(0,27)
0,01
0,03
(1,00)
Financial costs Profit / (loss) before tax
Net profit (loss) for the period Earnings per share:
Groclin Capital Group
Page 47 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Standalone statement of comprehensive income (continued)
3 months
9 months
3 months
9 months
period ended
period ended
period ended
period ended
Year ended
30 September 2013 30 September 2013 (unaudited) (unaudited)
31 December 2013 (audited)
30 September 2014 30 September 2014 (unaudited) (unaudited) Net profit / (loss) for the period
2 126
(3 089)
166
254
(8 481)
-
-
-
-
-
-
-
-
-
following periods Actuarial gains/(losses) on defined benefits programs
-
-
(39)
Deferred tax on actuarial gains/(losses)
-
-
7
254
(8 513)
Other comprehensive income Amounts that may be trasferred to income statement in following periods Exchange difference on translation from functional currency to presentation currency
1 125
2 219
Deferred tax on other comprehensive income Amounts that may not be trasferred to income statement in
Other comprehensive income
1 125
2 219
-
Total comprehensive income
3 251
(869)
166
Groclin Capital Group
(32)
Page 48 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Standalone report on financial situation As at 30 September 2014
As at 30 June 2014
As at 31 December 2013
As at 30 September 2013
(unaudited)
(unaudited)
(audited)
(unaudited)
8 698 85 593
4 502 86 520
1 381 96 007
4 207 94 702
258 854
258 097
259 851
253 938
41 200
40 778
39 530
39 530
-
-
-
-
2 071
531
-
-
396 417
390 428
396 769
392 377
18 540 65 505
21 092 75 050
14 597 44 914
15 977 48 242
3 511 322
3 038 321
1 620 -
2 731 -
ASSETS Non-current assets Intangible assets Property, plant and equipment Shares in subsidiaries and assosiations Other financial assets Investment property Deferred tax asset Current assets Inventories Trade receivables Other receivables Income tax receivables Other financial assets Other non-financial assets Cash and cash equivalents
Non-current assets held for sale TOTAL ASSETS
-
-
-
-
139
357
292
-
6 385
1 449
6 584
1 206
94 401
101 305
68 007
68 156
-
3 620
490 818
495 353
464 776
460 533
EQUITY AND LIABILITIES Equity Share capital Other capitals Retained earnings / Accumulated losses
11 578
11 578
11 578
11 578
368 382 (58 001)
368 382 (60 127)
376 862 (63 235)
376 862 (54 467)
2 219
1 094
-
-
324 178
320 927
325 205
333 973
Exchange differences on translation from functional currency to presentation currency Total equity Non-current liabilities Longterm loans and borrowings
56 392
54 353
72 338
76 538
Liabilities on lease contracts and other financial liabilities Employee benefits
1 586 511
1 357 509
1 292 507
1 225 399
Provisions
4 454
4 418
2 785
4 818
Longterm deferred income
8 664
8 730
8 929
8 849
-
-
285
2 753
71 608
69 366
86 136
94 582
Short-term loans and borrowings
44 158
40 197
9 221
7 723
Liabilities on lease contracts and other financial liabilities Trade payables
360 43 000
372 50 009
306 28 268
17 764
5 611 1 520
12 144 1 628
11 328 959
5 740 243
Deferred tax liabilities Current liabilities
Other non-financial liabilities Employee benefits Provisions
-
328
3 046
23
385 95 033
383 105 060
307 53 435
160 31 978
TOTAL LIABILITIES
166 641
174 426
139 571
126 560
TOTAL EQUITY AND LIABILITIES
490 818
495 353
464 776
460 533
Short-term deferred income
Groclin Capital Group
Page 49 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Standalone cash flow statement
3 months
9 months
3 months
9 months
period ended
period ended
period ended
period ended
Period ended
30 September 2014 30 September 2014 30 September 2013 30 September 2013 31 December 2013 (unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
796
(5 547)
457
429
(10 767)
1 180
9 495
980
2 410
3 886
-
-
-
-
(2 501)
737
2 083
520
1 453
1 389 2 107
(574)
(605)
-
2
(106)
14 773
(15 342)
1 232
(8 548)
(8 870)
2 627
(3 848)
796
(6 546)
(5 168)
(17 861)
8 745
(9 129)
4 420
16 564
(96)
(250)
(953)
(572)
361
Change in provisions and employee benefits
(341)
(2 413)
(74)
2 667
1 036
Income tax paid and tax benefit from PGK
Cash flows from operating activities Profit (loss) before tax ation Adjustments for: Amortization/depreciation Foreign exchange differences Impairment of non financial assets Net interest and shares in profits Gain/loss from investing activ ities Increase / decrease in trade receivables and other receivables Increase / decrease in inventories Increase / decrease in trade and other payables except for loans and borrowings, liabilities on lease contracts, factoring and dividends Change in deferred income
(554)
(222)
-
-
(1)
Other (including Finance income derivativ es)
270
270
(4 666)
(4 972)
41
Net cash flows from operating activities
956
(7 635)
(10 837)
(9 257)
(2 029)
3 947 (4 293)
4 086 (9 290)
2 504 (5 573)
65 (5 831)
551 (6 064)
Acquisition of shares in group companies
(140)
(1 817)
(7 339)
(8 822)
(9 030)
Granted loans
(417)
(1 670)
(14 531)
(15 058)
(15 058)
7
7
5
5
5
(896)
(8 684)
(24 934)
(29 641)
(29 595)
Cash flows from investing activities Proceeds from sale of property, plant and equipment and intangible asstes Purchase of property, plant and equipment and intangible assets
Other investing inflows and outflows Net cash flows from investing activities Cash flow from financing activities Repayment of finance lease liabilities
(58)
(278)
-
-
(484)
Proceeds from loans, borrowings
3 470
26 002
83 974
86 228
84 145
Repayment of loans, borrowings
2 197
(7 566)
(48 348)
(50 355)
(48 918)
Interest paid
(737)
(2 083)
(799)
(1 592)
(2 345)
Net cash flows from financing activ ities
4 873
16 075
34 827
34 281
32 398
Net increase/(decrease) in cash and cash equivalents Net foreign exchange differences
4 933 4
(244) 45
(944) 32
(4 617) (26)
774 (39)
Cash and cash equivalents at the beginning of the period
1 449
6 584
2 118
5 849
5 849
Cash and cash equivalents at the end of the period
6 385
6 385
1 206
1 206
6 584
Groclin Capital Group
Page 50 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Standalone statement of changes in equity Foreign currency Retained earnings / Share capital
Share premium
Other capitals
translation reserv e
Accumulated losses
Total
11 578
362 886
13 976
-
(63 235)
325 205
Net profit for the period Other comprehansiv e income
-
-
-
2 219
(3 089) -
(3 089) 2 219
Total comprehensive income
-
-
-
2 219
(3 089)
(869)
Sp. z o.o. and IGA Moto SKA Lossatcoverage As 31 December 2009 (unaudited)
(8 481) 11578- 354405,4111
13976-
2219,223-
(158) 8 481 -58001,29291
(158) -
As at 30 September 2014 (unaudited)
11 578
13 976
2 219
(58 001)
324 178
As at 1 January 2014
Effect of business combination with IGA Moto
354 405
Groclin Capital Group
Page 51 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Retained earnings / Accumulated
Share
Share
capital
premium
Other capitals
losses
Total
5 500
227 604
16 762
(51 086)
198 779
-
-
-
254
254 -
Total comprehensiv e income Provision for priv ileged shares cancellation Share issuance
6 078
131 646
(2 785) -
254 -
254 (2 785) 137 724
Profit distribution
11578-
3 636 362886
13976,5-
(3 636) -54468
-
As at 30 September 2013 (unaudited)
11 578
362 886
13 976
(54 467)
333 973
As at 1 January 2013 Net profit for the period Other comprehansiv e income
Groclin Capital Group
Page 52 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
As at 1 January 2013
PLN thousand
Retained earnings / Accumulated
Share
Share
capital
premium
Other capitals
losses
Total
5 500
227 604
16 762
(51 086)
198 779
Net profit for the period Other comprehansiv e income
-
-
-
(8 481) (32)
(8 481) (32)
Total comprehensive income Provision for priv ileged shares cancellation
-
-
(2 785)
(8 513) -
(8 513) (2 785)
Share issuance Profit As at distribution 31 December 2009 (unaudited)
6 078 11 578-
131 646 3 886 636 362
13 977
(3 636) (63 235)
137 724 -
As at 31 December 2013 (audited)
11 578
362 886
13 976
(63 235)
325 205
Groclin Capital Group
Page 53 of 79
Additional explanatory notes to the condensed quarterly financial statements Included on pages 54 to 78 are their integral part
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Additional explanatory notes 1.
General information
Groclin S.A. Group is a producer of car equipment and accessories, particularly car seat covers, well as electrical wiring and steering cabinets. In May 2014, Groclin S.A. took control over 96% of SeaTcon Group shares. SeaTcon deals in design, development and production of car seats, covers and accessories. Groclin Group delivers its products mainly to customers of car, railway, energy and telecommunication industries. The Capital Group also produces upholstered furniture. In September 2014, sale of an organized part of the Company’s enterprise occurred, i.e. the part of the Company’s operations related to hotel services and sport facilities tenancy. As on the day of publishing of the hereby report, Groclin Group employs nearly 4,000 people in nine production facilities. Our facilities are located in Poland, Ukraine and Germany and have production floor of 120,000 m2 in the aggregate. Our consolidated sales revenue in three quarters of 2014 amounted to PLN 337 million. The Parent Entity Groclin S.A. seated in Karpicko was established on 3rd November 1997 as a legal successor of Inter Groclin Auto Sp. z o.o. and based on the decision of the District Court in Zielona Góra. The Company conducts business activities on the territory of the Republic of Poland on the grounds of Code of Commercial Companies. The registration court of the Issuer: District Court Poznań – Nowe Miasto i Wilda in Poznań, 9th Commercial Department of the National Court Register, no KRS 0000136069. The Parent Entity was granted statistical REGON number 970679408. On 30th May 2014, Ordinary Shareholders Meeting adopted a resolution concerning change of the name and seat of the Issuer, which was recorded in the commercial register of National Court Register maintained by the district court of jurisdiction over the Issuer’s seat on 8th July 2014. The current name of the Company is Groclin S.A. (before 8th July 2014 Inter Groclin Auto S.A.). The Company’s seat is located in Grodzisk Wielkopolski (before 8th July 2014 the Company’s seat was located in Karpicko near Wolsztyn). The Company has unlimited period of operation. Condensed consolidated quarterly financial statements of the Group comprise statement of comprehensive income, cash flow statement and statement of changes in equity for the period of nine months ended 30th September 2014 and include comparative data for nine months’ period ended 30th September 2013 as well as for twelve months’ period ended 31st December 2013. Statement of comprehensive income and notes to statement of comprehensive income, as well as cash flow statement comprise also data for the three months’ period ended 30th September 2014 and comparative data for the three months’ period ended 30th September 2013. Condensed consolidated quarterly financial statements of the Group comprise also report on financial situation (balance sheet) as on 30th September 2014 and include comparative data as on 30th June 2014, 31st December 2013 and 30th September 2013.
Business profile The main area of Groclin Group’s business activities is production and sales of car equipment and accessories, as well as electrical wiring and steering cabinets. The Group conducts the following activities: production of car seat covers made from woven fabrics, natural leather and poroflex, design and development of car seats, covers and accessories, production of single independent bundles in large series for passenger cars,
Groclin Capital Group
Page 54 of 79
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
production of wiring for buses (ABS, air conditioning, steering panels), production of wiring for construction and special purpose machines and vehicles, production and assembly of steering cabinets’ wiring, production of railway traction equipment, wiring (signaling, lighting), steering cockpits for locomotives, railway carriage wiring, production of covers for upholstered furniture, production of upholstered furniture.
Shareholding structure As on 13th November 2014, shareholders holding no less than 5% of the total number of votes in Groclin S.A. Shareholders Meeting are the following: Kabelconcept Hornig GmbH holds 3,110,000 ordinary bearer shares, which constitute 26.86% of share capital and which in turn constitute 3,110,000 votes in Groclin S.A. Shareholders Meeting (26.86% of the total number of votes), Gerstner Managementholding holds 2,967,873 ordinary bearer shares, which constitute 25.63% of share capital and which in turn constitute 2,967,873 votes in Groclin S.A. Shareholders Meeting (25.63% of the total number of votes), Mrs. Maria Drzymała holds 1,131,511 Company’s shares, which constitute 9.77% of share capital and which in turn constitute 1,131,511 votes in Groclin S.A. Shareholders Meeting (9.77% of the total number of votes). Mr. Zbigniew Drzymała holds 657,375 ordinary bearer shares, which constitute 5.68% of share capital and which in turn constitute 657,375 votes in Groclin S.A. Shareholders Meeting (5.68% of the total number of votes), Kabelconcept Hornig GmbH and Gerstner Managementholding GmbH jointly hold 52.49% of Groclin S.A. share capital. The majority shareholder of these entities is Mr. André Gerstner, who holds 60% shares in Kabelconcept Hornig GmbH and 100% shares in w Gerstner Managementholding GmbH. Therefore, Mr. André Gerstner controls Groclin Group. On 18th September 2014, the Management Board of Groclin S.A. received a notification from Mr. Zbigniew Drzymała regarding a decrease of his share in the Company. Mr. Zbigniew Drzymała informed the Company, based on article 69 item 1 Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies (Journal of Laws 2005, number 184, item 1539), that according to information received from brokerage house dated 15th September 2014 his share in total number of votes in the Company decreased by 2.94% and dropped below 10% as a result of sale in a regulated market through Warsaw Stock Exchange. Sale of Groclin S.A. shares occurred in the period 26th August 2014 – 9th September 2014. Transactions resulting in decrease of Mr. Zbigniew Drzymała’s share by 2% and below 10% occurred on the same day that is on 8th September 2014. Hitherto shareholding of Mr. Zbigniew Drzymała amounted to 1,474,760 shares and constituted 12.74% share in total number of shares, votes and share capital. As a result of the transactions concluded, according to information dated 15th September 2014, shareholding of Mr. Zbigniew Drzymała amounted to 1,134,744 shares, which constituted 9.80% in total number of shares, votes and share capital (current report 42/2014). On 13th October 2014, the Management Board of Groclin S.A. received a notification from Mrs. Maria Drzymała regarding a decrease of her share in the Company. Mrs. Maria Drzymała informed the Company, based on article 69 item 1 Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies (Journal of Laws 2005, number 184, item 1539), that according to information received from brokerage house dated 9th October 2014 her share in total number of votes in the Company decreased by 2.22%. Hitherto shareholding of Mrs. Maria Drzymała amounted to 1,474,760 shares and constituted 12.74% share in total number of shares, votes and share capital. As a result of the transactions concluded, according to information dated 15th September 2014, shareholding of Mrs. Maria Drzymała amounted to 1,217,461 shares, which constituted 10.52% in total number of shares, votes and share capital. Transactions of sale of 257,299 Company’s
Groclin Capital Group
Page 55 of 79
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
shares occurred in a regulated market through Warsaw Stock Exchange in the period 10th September 2014 – 8th October 2014 (current report 50/2014). On 17th October 2014, the Management Board of Groclin S.A. received another notification from Mrs. Maria Drzymała regarding a decrease of his share in the Company. Mrs. Maria Drzymała informed the Company, based on article 69 item 1 Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies (Journal of Laws 2005, number 184, item 1539), that according to information received from brokerage house dated 16th October 2014 her share in total number of votes in the Company decreased below 10%. Hitherto shareholding of Mrs. Maria Drzymała amounted to 1,217,461 shares and constituted 10.52% share in total number of shares, votes and share capital. As a result of the transactions concluded, shareholding of Mrs. Maria Drzymała amounted to 1,131,511 shares, which constituted 9.77% in total number of shares, votes and share capital. Transactions of sale of 85,950 Company’s shares occurred in a regulated market through Warsaw Stock Exchange in the period 9th October 2014 – 13th October 2014 (current report 53/2014). The figures included in the above summary as on 13th November 2014 and related to number of Groclin S.A. shares and votes resulting thereof in Shareholders Meeting of Groclin S.A. held by Mr. Zbigniew Drzymała and Mrs. Maria Drzymała have been published based on their declaration dated 5th November 2014. No changes in structure of significant shareholding of the issuer’s shares occurred since publishing of the previous periodic report, i.e. compared to 28st August 2014, until the day of the hereby report. The Parent Entity of the whole Groclin Capital Group is Groclin S.A. The Company and the Group companies have unlimited period of operation.
2.
Composition of the Group
The Group is composed of Groclin S.A. and the following subsidiaries:
Groclin Capital Group
Page 56 of 79
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
Entity
Registered office
Business activities
PLN thousand
Groclin Group's share in equity of subsidiaries as at 13 30 31 November September December 2014 2014 2013
Kabel-Technik-Polska Sp. z o.o. Groclin Karpaty Sp. z o.o.
Pławieńska 5, Czaplinek, Poland Slovianska Nadberezhna 31, Uzhhorod, Ukraine
wires prodction
100%
100%
100%
covers production
100%
100%
100%
under construction
100%
100%
100%
100%
100%
100%
100%
100%
100%
Groclin Dolina Sp. z o.o.
Oblisky 36/23, Dolyna, Ukraine
Groclin Service Sp. z o.o.
Wojska Polskiego 34, Nowa Sól, Poland
IGA Nowa Sól Sp. z o.o.
Wojska Polskiego 34, Nowa Sól, Poland
IGA Moto Sp. z o.o.
Słowiańska 4, Grodzisk Wielkopolski, Poland holding activity
-
-
100%
IGA Moto Sp. z o.o. SKA
Słowiańska 4, Grodzisk Wielkopolski, Poland holding activity
-
-
100%
KTP Moto Sp. z o.o.
Słowiańska 4, Grodzisk Wielkopolski, Poland holding activity
-
-
100%
KTP Moto Sp. z o.o. SKA
Słowiańska 4, Grodzisk Wielkopolski, Poland holding activity
-
-
100%
100%
100%
100%
100%
97%
-
workforce hiring to other group companies covers production
management of rights to trademarks used by Groclin
MARKETING INTER GROCLIN AUTO Słowiańska 4, Grodzisk Wielkopolski, Poland Capital Group companies in S.A. S.j. their business operations and marketing activities
SeaTcon AG
An den Kiesgruben 2, Wendlingen, Germany
production of car seats, covers and accessories design and development of
Sedis Tec
An den Kiesgruben 2, Wendlingen, Germany car seats, covers and accessories
100%
97%
-
Groclin Wiring Sp. z o.o.
Słowiańska 4, Grodzisk Wielkopolski, Poland wires prodction
100%
100%
-
As on 30th September 2014 and as on the day of publishing of the hereby report, the percentage of voting rights held by the Group in subsidiaries corresponds to the percentage held in share capitals of these entities. All subsidiaries within the Group are consolidated under the full method from the day of obtaining control by the Group and cease to be consolidated from the day the control has been transferred out of the Group. On 28th February 2014, a merger occurred of the subsidiary Kabel-Technik-Polska Sp. z o.o. with its subsidiaries, i.e. KTP Moto Sp. z o.o. and KTP Moto S.K.A., while on 31st March 2014 a merger occurred of Groclin S.A. with its subsidiaries IGA Moto Sp. z o.o. and IGA Moto S.K.A.
Groclin Capital Group
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PLN thousand
On 29th May 2014, following the consent of the banks who give financing, the provisions of the agreement dated 8th April 2014 came into effect. Under the agreement, the Managenent Board of Groclin concluded a sales agreement with the following natural persons: Mr. Ulf Schlenker, Mr. Thomas Schierle, Mr. Massimo Lechthaler and Mrs. Eva Lutz (the sellers), for sale of shares in a joint-stock company under German law SeaTcon AG seated in Wendlingen. Therefore, on 29th May 2014 Groclin S.A. took control over 96% shares of SeaTcon AG, who holds 100% shares in Sedis Tec seated in Wendlingen, Germany. In July 2014, Groclin S.A. acquired 0.6% shares in SeaTcon AG and increased its total share to more than 97%. In October 2014, Groclin S.A. acquired remaining 3% shares in SeaTcon AG. Thus Groclin S.A. has become the only shareholder of SeaTcon Group. On 13th June 2014, the Management Board of Groclin S.A. founded a subsidiary Groclin Wiring Spółka z ograniczoną odpowiedzialnoscią seated in Grodzisk Wielkopolski, with the initial capital of PLN 100,000.00, divided into 100 shares of par value PLN 1,000.00 each and total value of PLN 100,000, which were fully taken up by Groclin S.A. On 23rd September 2014, Groclin S.A. sold 6,000 shares of a subsidiary Groclin Service Sp. z o.o., representing 6% of the company’s share capital, to a subsidiary IGA Nowa Sól, seated in Nowa Sól. Since 31st December 2013, a significant increase of economic and political uncertainty in Ukraine occurred. Moreover, from 1st January 2014 until 30th September 2014 a depreciation of Ukrainian hryvnia towards main foreign currencies occurred by app. 51% (calculated based on quotations of National Bank of Ukraine, “NBU”). NBU imposed certain restrictions concerning purchase of foreign currencies in the interbank market. Moreover, international rating agencies lowered credit ratings of Ukraine. These occurrences as well as possible future negative events in Ukraine may have an adverse impact on financial results and standing of the Group and its Ukrainian subsidiaries, a manner of which cannot be determined at the moment.
3.
Management and supervisory bodies
3.1.
Management Board of the Parent Entity
As on 30th September 2014, as well as on the day of publishing of the hereby report, the following persons constituted the Parent Entity’s Management Board: Mr. André Gerstner – President of the Management Board, appointed on 30th April 2014;
3.2.
Supervisory Board of the Parent Entity
As on 30th September 2014, the following persons constituted the Parent Entity’s Supervisory Board: Mr. Waldemar Frąckowiak – Chairman of the Supervisory Board, appointed on 30th May 2014; Mr. Piotr Gałązka – Member of the Supervisory Board, appointed on 30th May 2014; Mrs. Maria Drzymała – Member of the Supervisory Board, appointed on 8th July 2014; Mr. Mike Gerstner –Member of the Supervisory Board, appointed on 30th May 2014; Mr. Jörg-H. Hornig –Member of the Supervisory Board, appointed on 30th May 2014. As on the day of publishing of the hereby report, the following persons constituted the Parent Entity’s Supervisory Board: Mr. Piotr Gałązka – Member of the Supervisory Board, appointed on 30th May 2014; Chairman of the Supervisory Board, appointed on 4th November 2014; Mr. Michał Głowacki – Member of the Supervisory Board, appointed on 4th November 2014; Vice-Chairman of the Supervisory Board, appointed on 4th November 2014; Mr. Mike Gerstner – Member of the Supervisory Board, appointed on 30th May 2014;
Groclin Capital Group
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PLN thousand
Mr. Jörg-H. Hornig – Member of the Supervisory Board, appointed on 30th May 2014. Mr. Wilfried Gerstner - Member of the Supervisory Board, appointed on 4th November 2014; On 1st October 2014, Mr. Waldemar Frąckowiak resigned from being a member of the Supervisory Board and serving as the Chairman of the Supervisory Board of the Issuer with immediate effect (current report no 45/2014). On 13th October 2014, Mrs. Maria Drzymała resigned from being a member of the Supervisory Board with the effect on 13th October 2014 (current report no 49/2014). On 4th November 2014, Extraordinary Shareholders Meeting of the Issuer appointed Mr. Wilfried Gerstner and Mr. Michał Głowacki as members of the Supervisory Board. On 4th November 2014, by the power of resolution no 15/2014, The Supervisory Board of Groclin S.A. appointed Mr. Piotr Gałązka as the Chairman of the Supervisory Board of Groclin S.A. and, by the power of resolution no 16/2014, appointed Mr. Michał Głowacki as the Vice-President of the Supervisory Board of Groclin S.A. (current report 55/2014).
3.3.
Audit Committee of the Parent Entity
Since 8th July 2014, the Supervisory Board has been composed of five members and serves the function of the Audit Committee fully. Until the date of publishing of the hereby report, there were no changes in the composition of the Audit Committee of the Parent Entity.
4.
Approval of the financial statements
The hereby interim condensed quarterly consolidated financial statements were approved for publishing by the Management Board on 13th November 2014.
5.
Basis of preparation of consolidated financial statements
The hereby interim condensed financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), in particular in accordance with IAS (International Accounting Standard) 34 and the IFRS endorsed by the EU. IFRS comprise standards and interpretations accepted by the International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”). The hereby condensed quarterly consolidated financial statements are presented in Polish zloty (“PLN”) and all values are rounded to the nearest thousand (PLN ‘000) except when otherwise indicated. Some of the figures presented in total in the hereby financial statements may not be equal to exact arithmetic sums of the comprised amounts because of the presentation of the financial statements in PLN thousand and the applied rounding. The hereby financial statements have been prepared on the assumption that the Group companies will continue as going concerns in the foreseeable future. As at the date of approval of the hereby financial statements, no facts or circumstances that would indicate threats to the continuation of business operations of the Group companies have been found. Interim financial results may not fully reflect the financial result possible to achieve in the financial year. Some of the Group entities keep their accounting books in compliance with accounting policies set by the bill dated 29th September 1994 Accounting Act, as amended, and the principles announced based on the Accounting Act (Polish accounting standards), and in compliance with the bill on accounting and financial reporting in Ukraine and Germany, National Accounting Standards and other law related to bookkeeping evidence organization (“Ukrainian and German accounting standards”). Consolidated financial statements include adjustments which have not been recorded in accounting books of the Group entities and
Groclin Capital Group
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PLN thousand
which have been introduced for the purpose of bringing the financial statements of these entities to the state of compliance with IFRS. Consolidated cash flow statement is a summary of respective items of cash flow statements of particular Groclin Group companies expressed in their functional currencies and translated to PLN, which is the presentation currency of the Group, using the average exchange rate prevailing in the period for the given currency. The summary is adjusted for consolidation purposes. Moreover, cash flow statements of subsidiaries which were acquired in the reporting period are summed up for the period from the day of taking control over the entity and until the day on which the particular period ends. For that reason, some items in consolidated cash flow statement are not arithmetical remainders of balances of respective items in consolidated statements of financial position. Condensed quarterly consolidated financial statements do not include all information and disclosures required in the annual consolidated financial statements and shall be read together with the consolidated financial statements of the Group for the year ended 31st December 2013.
6.
Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31st December 2013, except for the following application of changes in standards and new interpretations binding for yearly periods beginning on 1st January 2014: IFRS 9 Financial Instruments (published on 24th July 2014) – effective for annual periods beginning on or after 1st January 2018; until the date of approval of these financial statements, the standard has not been adopted by the EU; as at the date of approval of these financial statements, the process of adoption of the standard for application within the EU was discontinued, IFRIC 21 Levies (published on 20th May 2013) – effective for annual periods beginning on or after 1st January 2014; within the EU, effective at the latest for annual periods beginning on or after 17th June 2014, Amendments to IAS 19 Defined Benefit Plans: Employee Contributions (published on 21st November 2013) – effective for annual periods beginning on or after 1st July 2014; not adopted by the EU by the date of approval of these financial statements, Amendments resulting from review of IFRS 2010-2012 (published on 12th December 2013) – some of the amendments are effective for annual periods beginning on or after 1st July 2014, while some are effective prospectively for transactions entered into on or after 1st July 2014; until the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments resulting from review of IFRS 2011-2013 (published on 12th December 2013) – effective for annual periods beginning on or after 1st July 2014; until the date of approval of these financial statements, the amendments have not been adopted by the EU, IFRS 14 Regulatory Deferral Accounts (published on 30th January 2014) – effective for annual periods beginning on or after 1st January 2016; no decision has been made as to when EFRAG will carry out the individual stages of work leading to the approval of this standard; until the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations (published on 6th May 2014) – effective for annual periods beginning on or after 1st January 2016; until the date of approval of these financial statements, the amendments have not been adopted by the EU,
Groclin Capital Group
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PLN thousand
Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation (published on 12th May 2014) – effective for annual periods beginning on or after 1st January 2016; until the date of approval of these financial statements, the amendments have not been adopted by the EU, IFRS 15 Revenue from Contracts with Customers (published on 28th May 2014) – effective for annual periods beginning on or after 1st January 2017; until the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants (published on 30th June 2014) – effective for annual periods beginning on or after 1st January 2016; until the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to IAS 27 Equity Method in Separate Financial Statements (published on 12th August 2014) – effective for annual periods beginning on or after 1st January 2016; until the date of approval of these financial statements, the amendments have not been adopted by the EU,
The adoption of the aforementioned changes to standards did not cause changes of the comparative data. The Group has not early adopted any other standard, interpretation or amendment that was issued but is not yet effective. As on 30th June 2014, accounting policies applied in Groclin Group have been broadened with principles of recognition and measurement of assets held for trading. Assets held for trading are presented in a separate item of statement of financial position and measured at the lower of two amounts: hitherto net amount and fair value less of sales cost. From 1st January 2014, Groclin S.A., KTP, IGA Nowa Sól and Groclin Service have formed a tax group for the purpose of settlement of corporate income tax. As for settling receivables and liabilities on the grounds of income tax between the companies of the tax group, Groclin Group has applied a principle which states that tax benefits related to lower tax burdens of the tax group compared to tax burdens of the companies if the tax group did not exist shall be recognized in income statements of those companies which reported tax loss in the particular period. On 23rd September 2014, the tax group has been dissolved. From 23th September 2014, these companies perform individual settlements of corporate income tax
6.1.
Translation of financial statements of subsidiaries whose functional currency is different than PLN and translation of items expressed in currencies other than functional currency
Translation of financial statements of subsidiaries whose functional currency is different than PLN to presentation value Because of the ever-growing share of EUR in the total amount of transactions entered into by Groclin S.A. and arising of new financial liabilities in EUR, starting from 1st January 2014, EUR has been the functional currency of Groclin S.A. According to IAS 21, the change of functional currency from PLN to EUR starting from 1st January 2014 has been recognized prospectively. Particular items of the Company’s equity as on 31st December 2013 have been re-measured at average NBP exchange rate prevailing on 31st December 2013, i.e. 4.1472. The functional currency of KTP is EUR. As for the companies which conduct business activities in Ukraine, the functional currency is Ukrainian hryvnia (UAH), and for the companies operating in Germany the functional currency is EUR. The functional currency of the other companies of Groclin Group is Polish zloty (PLN). On the balance sheet date, the assets and liabilities of subsidiaries whose functional currency is different than PLN are translated into the presentation currency of the Group (PLN) using the exchange rate prevailing on the balance sheet date and their statements of comprehensive income are translated using the average weighted exchange rates for the given financial period. Equity is
Groclin Capital Group
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PLN thousand
translated at its value on the day of taking control by the Parent Entity at the average exchange rate announced by NBP for this day. In case of new issuance of additional shares, average exchange rate announced for the given currency by NBP as on the day of registering the increase of capital is applied for their translation. The exchange differences arising on the translation are recognized in other comprehensive income and accumulated in a separate position of equity. On disposal of a foreign operation, the cumulative amount of the deferred exchange differences recognized in equity and relating to that particular foreign operation are recognized in the income statement. The following exchange rates have been applied for translation of financial statements of subsidiaries from functional currency EUR or UAH to presentation currency (PLN). for statement of financial position:
As at
As at
30 September 2014
31 December 2013
EUR
4,1755
4,1472
UAH
0,2554
0,3706
for statement of comprehensive income
01/01 - 30/09/2014
01/01 - 30/09/2013
EUR
4,1759
4,2016
UAH
0,2815
0,3933
Translation of items expressed in foreign currencies On the balance sheet date, monetary assets and liabilities expressed in currencies different than PLN are translated into PLN using the appropriate average exchange rate prevailing at the end of the reporting period and announced for the given currency by National Bank of Poland. Exchange differences resulting from translation are recorded under financial income or financial costs or under capitalized cost of assets, based on defined examples in accounting policy. Non-monetary foreign currency assets and liabilities recognized at historical cost are translated at the historical foreign exchange rate prevailing on the transaction date. Nonmonetary foreign currency assets and liabilities recognized at fair value are translated using the rate of exchange binding as on the date of fair value measurement
6.2.
Comparability of data
Conclusion of the conditional investment agreement on 21st March 2013, which was finalized on 21st June 2013, and under which the hitherto KTP shareholders received newly issued series F shares of Groclin S.A. in exchange for 100% of KTP shares, means that KTP shareholders became majority shareholders of Groclin S.A.. The Management Board of Groclin S.A. decided that, according to IFRS 3 Business Combinations, the transaction of acquisition of KTP shares fulfilled the criteria of reverse acquisition, under which KTP was recognized as the company who acquired Groclin Group and hitherto Groclin Group was recognized as the entity that was acquired by KTP. Therefore, the hereby condensed quarterly consolidated financial statements present, among other things, the following financial data:
Groclin Capital Group
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PLN thousand
report on financial standing – balance sheet as on 30th September 2014, 30th June 2014, 30th September 2013 and 31st December 2013, presenting the financial situation of consolidated entities, statement of comprehensive income, statement of changes in equity and cash flow statement for the nine months’ period ended 30th September 2014, the three months’ period ended 30th September 2014, and the three months’ period ended 30th September 2013, presenting the financial results of all consolidated entities, statement of comprehensive income, statement of changes in equity and cash flow statement for the nine months’ period ended 30th September 2013, presenting the financial results and cash flows of KTP until the transaction day as well as of all consolidated entities from the transaction date until 30th September 2013, statement of comprehensive income, statement of changes in equity and cash flow statement for the year ended 31st December 2013, presenting the financial results and cash flows of KTP until the transaction day as well as of KTP and Groclin Group from the transaction day until 31st December 2013.
Profit on bargain purchase (reverse acquisition as on 30th June 2013) As described in details in note 11 of the consolidated financial statements of Groclin Group for the year ended 31st December 2013, an adjustment was performed of fair value of inventories, intangible assets, other non-financial assets and provisions for the total amount of PLN 18,536 thousand, compared to the settlement presented in interim condensed consolidated financial statements as on 30th September 2013, resulting from the settlement of reverse acquisition performed on this day. As a result, the profit on bargain purchase decreased by the aforementioned amount, i.e. from PLN 63,818 thousand to PLN 45,277 thousand. Statement of comprehensive income and cash flows statement for the periods of three and nine months’ ended 30th September 2013, and statement of financial position as on 30th September 2013 in the hereby report present accordingly transformed data. Fair value changes in Groclin S.A. As described in details in note 8.2 to standalone annual financial statements of Groclin S.A. for the year ended 31st December 2013, for the purpose of settlement of 100% KTP shares’ acquisition, a fair value measurement was performed in consolidated financial statements in respect of Groclin S.A.’s assets and liabilities as on 21st June 2013. It turned out that carrying amounts of some assets are higher than their fair values. As a result of tests performed, it was decided that particular assets and liabilities of the Company need to be adjusted, to some extent concerning previous years. Applied adjustments resulted in the following changes in the balance sheet as on 30th September 2013, as presented in the hereby report: - decrease of intangible assets by PLN 4,132 thousand, - decrease of property, plant and equipment by PLN 222 thousand, - decrease of inventories by PLN 8,218 thousand, - increase of long-term provisions by PLN 2,033 thousand, - decrease of retained earnings / accumulated losses by PLN 14,605 thousand, compared to standalone balance sheet of Groclin S.A. as on 30th September 2013, presented in condensed quarterly report for the nine months’ period ended 30th September 2013. The aforementioned adjustments did not result in changes in statement of comprehensive income for the nine months’ period ended 30th September 2013.
6.3.
Merger of Groclin S.A. with IGA Moto sp. z o.o. and IGA Moto S.K.A.
On 31st March 2014, a merger of Groclin S.A. with its subsidiaries IGA Moto Sp. z o.o. and IGA Moto S.K.A. occurred. Settlement of the merger has been recorded in the books of Groclin S.A. as follows: profit/loss of IGA Moto Sp. z o.o. and IGA Moto S.K.A. for 2013 has been recorded under retained earnings/losses carried forward from previous years as on 31st March 2014, while profit/loss of these companies for the period from 1st January 2014 until the day of merger, that is 31st March 2014, has been recorded in statement of comprehensive income of Groclin S.A. under other income and operating cost, because the amounts were
Groclin Capital Group
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PLN thousand
irrelevant. Amounts of particular assets and liabilities, excluding assets and liabilities towards Groclin S.A. increased respective items of assets and liabilities of Groclin S.A. as on 31st March 2014. Amounts of assets and liabilities of the merged companies were irrelevant compared to assets and liabilities of Groclin S.A. as on 31st March 2014.
7.
Business seasonality
Demand for the Group’s products fluctuates slightly during the year. Lower demand for our products is reported each year during summer holidays and in Christmas season when a number of production facilities, particularly those in Western Europe, are closed for business. The changes in the demand for our products are not significant compared to the demand in the rest of the year.
8.
Information concerning business segments
The business results for the period ended 30th September 2014, as presented in the hereby consolidated financial statements, comprise activities of KTP and activities of the companies of Groclin Group (in its composition before acquisition of shares in KTP and Groclin Wiring, i.e. “Small IGA”), activities of SeaTcon Group and other. The companies of Small IGA comprise: Groclin S.A., Groclin Karpaty sp. z o.o., Groclin Service sp. z o.o., IGA Nowa Sól sp. z o.o., Groclin Dolina sp. z o.o. and Groclin Wiring Sp. z o.o. Because of the business characteristics which is management of “IGA” and “KTP” trademarks, the Management Board of Groclin S.A. decided to separate, from 1st January 2014, additional segment “Other” containing financial data of Marketing Inter Groclin Auto S.A. S.j.. As on 31st December 2013, because of minor importance of Marketing Inter Groclin Auto S.A. S.j. transactions, its financial data was included in “Small IGA” segment. Moreover, because of the acquisition of SeaTcon Group in the second quarter of the current year, the Management Board decided to separate “SeaTcon” segment to present data of this group. In three quarters of 2014, Groclin Group identified the following business segments: “Small IGA”, comprising financial data of the following entities: Groclin S.A., Groclin Karpaty sp. z o.o., Groclin Service Sp. z o.o., IGA Nowa Sól Sp. z o.o., Groclin Dolina Sp. z o.o. and Groclin Wiring Sp. z o.o., including respective consolidation adjustments, focused particularly on car covers production and sales, and own production of bundles starting from 1st January 2014, “KTP”, comprising financial data of KTP, focused on production of bundles and steering/controlling cabinets, “SeaTcon”, comprising financial data of SeaTcon Group, focused on design and production of special car covers. Because of the fact that only little time passed since taking control over SeaTcon Group, the Management Board analyzes its results in separation from financial data of other segments, other – comprising financial data of Marketing Inter Groclin Auto S.A. S.j. Because of the fact that in the period ended 30th September 2013 car industry segment was the main segment of the Group, constituting 98% of consolidated revenue and the segment’s results were monitored on the same level as presented in statement of comprehensive income, separate financial data of segments was not presented for this period. The following table presents revenue and profit information and certain assets and liabilities information divided into individual Group segments for the nine months’ period ended 30th September 2014 and as on 30th September 2014.
Groclin Capital Group
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PLN thousand
Nine months’ period ended 30th September 2014 and as on 30th September 2014 Continuing Operations "Small IGA"
KTP
Seatcon Group
Other
Total
Eliminations
Total Group
Sales to external customers Inter-segment sales
170 213 9 064
152 994 15 051
13 782 -
4 993
336 989 29 108
(29 108)
336 989 -
Total segment revenues
179 277
168 045
13 782
4 993
366 097
(29 108)
336 989
(9 900)
1 319
7 298
4 643
3 359
(4 919)
(1 560)
Revenues
Segment's Result Operating profit / (loss) Finance income Finance costs
360 (6 482)-
Profit before tax
(7 682)
Segment assets
277 471
139 545
21 892
102 252
541 160
(107 763)
433 397
Segment liabilities
156 091
126 693
10 492
40 858
334 135
(53 732)
280 403
Operating profit of “SeaTcon Group” segment includes profit on bargain purchase. The following table presents revenue and profit information and certain assets and liabilities information divided into individual Group segments for the three months’ period ended 30th September 2014 and as on 30th September 2014.
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Three months’ period ended 30th September 2014 and as on 30th September 2014 Continuing Operations "Small IGA"
KTP
Seatcon Group
Other
Total
53 527
46 473
2 983
3 787
56 510
132
Eliminations
Total Group
10 932
-
-
1 480
110 932
-
110 932
8 249
(8 249)
0
50 260
10 932
1 480
119 181
(8 249)
110 932
1 561
452
1 467
3 612
(4 926)
(1 314)
Revenues Sales to external customers Inter-segment sales Total segment revenues Segment's Result Operating profit / (loss) Financial income Financial cost
226 (2 196) -
Profit/(Loss) before tax
(3 284)
Segment assets
277 471
139 545
21 892
102 252-
541 160
(107 763)-
433 397
Segment liabilities
156 091
126 693
10 492
40 858
334 135
(53 732)
280 403
The following table presents revenue and profit information and certain assets and liabilities information divided into individual Group segments for the year ended 31st December 2013 and as on 31st December 2013.
Twelve months’ period ended 31st December 2013 and as on 31st December 2013 Continuing Operations "Mała IGA"
KTP
Other
Total
Eliminations
Total Group
Sales to external customers Inter-segment sales
73 598 4 474
211 800 163
na na
285 398 4 637
(4 637)
285 398 -
Total segment revenues
78 072
211 963
na
290 035
(4 637)
285 398
Segment's Result Operating profit / (loss)
(12 545)
37 708
na
25 163
-
25 163
Revenues
Financial income Financial costs
3 462 (4 176)
Profit before tax Segment assets
312 004
132 755
nd
444 759
Segment liabilities
141 280
140 116
nd
281 396
Groclin Capital Group
24 449 (1 563)
443 196
(1 563)
279 833
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9.
PLN thousand
Dividend paid and proposed
Payment of dividend occurs based on the results reported in standalone financial statements of Groclin S.A. In accordance with provisions of Code of Commercial Companies, the Company is obliged to establish a share premium to finance possible losses. At least 8% of the profit for the financial year shown in the financial statements of the Company should be transferred to this category of capital until this capital reaches the amount of at least one third of the share capital. The use of share premium and reserve capital is determined by the Shareholders Meeting; however, the part of share premium equal to one third of the share capital can be used only to finance the losses shown in the financial statements of the Company and cannot be distributed to other purposes. On the grounds of the agreement concluded on 5th June 2013 by and between the Group companies and mBank S.A., the payment of dividend requires prior consent of the Bank. As on 30th September 2014, there are no other limitations to payment of dividend. Until the day of publishing of the hereby report and in 2013 the Company did not pay any dividend. On 30th May 2014, Ordinary Shareholders Meeting of the Issuer adopted resolution no 8 regarding covering the loss for financial year 2013. According to the resolution, the loss for 2013 in the amount of PLN 8,481 thousand was fully covered with the Company’s share premium. The Company’s Shareholders Meeting did not decide for payment of dividend. Until the day of preparation of the hereby interim condensed financial statements, the Company had not declared payment of dividend.
10.
Earnings per share
Earnings per share ratio is established by dividing the net profit/loss for the reporting period attributable to the ordinary shareholders of the Parent Entity by weighted average number of issued ordinary shares existing in the reporting period. Information regarding profit/loss and number of shares, which was the base for calculation of earnings per share and diluted earnings per share, are presented below:
Groclin Capital Group
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Net profit (loss) for the period from continuing operations attributable to equity holders of the parent
PLN thousand
3 months
9 months
3 months
9 months
period ended
period ended
period ended
period ended
30 September 2014
30 September 2014
30 September 2013
30 September 2013
(unaudited)
(unaudited)
(revised)
(revised)
(2 003)
(4 449)
1 653
48 788
-
-
-
-
(2 003)
(4 449)
1 653
48 788
-
-
6 077 873
6 077 873 11 577 873
Profit (loss) for the period from discontinued operations attributable to equity holders of the parent Net profit (loss) for the period Number of KTP shares till 21 June 2013 adjusted by ratio of ex change Number of Groclin S.A. shares after 21 June 2013
11 577 873
11 577 873
11 577 873
Number of shares - A series
382 500
382 500
382 500
382 500
Number of shares - B series
2 442 500
2 442 500
2 442 500
2 442 500
Number of shares - C series Number of shares - D series
675 000 850 000
675 000 850 000
675 000 850 000
675 000 850 000
Number of shares - E series
1 150 000
1 150 000
1 150 000
1 150 000
Number of shares - F series
6 077 873
6 077 873
6 077 873
6 077 873
Total number of shares
11 577 873
11 577 873
11 577 873
11 577 873
Weighted average number of shares
11 577 873
11 577 873
11 577 873
8 120 152
Weighted average diluted number of shares
11 577 873
11 577 873
11 577 873
8 120 152
Profit/(loss) per share (in PLN)
(0,17)
(0,38)
0,14
6,01
Diluted profit/(loss) per share (in PLN)
(0,17)
(0,38)
0,14
6,01
As there are no diluting potential ordinary shares, diluted earnings per share equal earnings per share. To calculate earnings per share in standalone financial statements for the nine months’ period ended 30th September 2013 a weighted average number of 7,748,590 shares was adopted, while for the three months’ period ended 30th September 2013 a weighted average number of 11,577,873 shares was adopted. In the quarterly report for the third quarter of 2013, for the nine months’ and three months’ periods ended 30th September 2013 a number of 5,500,000 shares was adopted, excluding issuance of series F shares after 21st June 2013.
11.
Interest-bearing loans and borrowings
In three quarters of 2014, the Group performed repayments of loans taken from natural persons and amounting to PLN 1,692 thousand and PLN 2,021 thousand as on 31st December 2013. During the reporting period, the Group increased its debt on the grounds of bank loans under and according to provisions of loan agreements concluded in July 2013 with mBank S.A., PKO BP S.A. and BZ WBK S.A. A change of presentation occurred concerning the loan in the amount of PLN 36,450 thousand from long-term liabilities to shortterm liabilities as on 30th September 2014. The change of presentation results from requirements of IAS 1 and is not imposed by bank loan agreements.
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
12.
PLN thousand
Equity securities As at
As at
30 September 2014 31 December 2013 (unaudited) (audited)
Share capital A series ordinary shares with par value of PLN 1 each B series ordinary shares with par value of PLN 1 each
382 500 2 442 500
382 500 2 442 500
C series ordinary shares with par value of PLN 1 each D series ordinary shares with par value of PLN 1 each
675 000 850 000
675 000 850 000
D series ordinary shares with par value of PLN 1 each F series ordinary shares with par value of PLN 1 each Trade receivables
1 150 000 6 077 873
1 150 000 6 077 873
11 577 873
11 577 873
capital increase
Volume
Value in PLN
A series ordinary shares with par value of PLN 1 each B series ordinary shares with par value of PLN 1 each
03-11-1997 11-12-1997
382 500 2 442 500
382 500 2 442 500
C series ordinary shares with par value of PLN 1 each D series ordinary shares with par value of PLN 1 each
31-05-2000 31-07-1998
675 000 850 000
675 000 850 000
D series ordinary shares with par value of PLN 1 each F series ordinary shares with par value of PLN 1 each
05-05-2003 19-08-2013
1 150 000 6 077 873
1 150 000 6 077 873
11 577 873
11 577 873
Date of registration of Ordinary shares issued and fully covered
As at 30 September 2014 (unaudited)
In the period covered by the hereby quarterly financial statements and until the day of publishing of the hereby report, the Company did not perform any transactions with use of equity securities.
13.
Acquisition of SeaTcon Group
On 29th May 2014, following the consent of the banks who give financing to the companies of Groclin Group, Groclin S.A. took control over two German companies forming SeaTcon Group, by means of acquisition of 96% shares of SeaTcon AG. Because of the fact than only little time passed since taking control, for the purpose of settlement of the SeaTcon Group net assets acquisition, the Group applied financial data of SeaTcon Group as on 31st May 2014. The companies of SeaTcon Group deal in design and production of high-quality car covers.
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
The table below present the settlement of SeaTcon shares acquisition as on 29th May 2014: Fair value taken to final settlement as at 29 May 2014
Property, plant and equipment Intangible assets Deferred tax asset Cash and cash equivalents Trade and other receivables - of which receivables from Groclin Group Inventories Other curent assets
2 047 14 023 29 14 7 603 3 684 69 27 468
Trade payables and other current liabilities
6 678
- of which payables to Groclin Group Interest-bearing loans and borrowings and other financial liabilities
6 206
- of which payables to Groclin Group Provision and accruals
(1 243) 480 12 122
Equity: Share capital Share premium Retained earnings Total equity
Carrying value of identifiable assets, liabilities and contingent liabilities Non-controlling interest Goodwill arosen from acquisition (Profit on bargain purchase) Total consideration
1 398 1 814 (2 914) 298
15 346 (364) (10 854) 4 127
Allocation of negative goodwill Negative goodwill arosen from business combination (Bargain purchase)
10 854
Dereffed tax Impact on net profit
(3 866) 6 989
including – attributable to equity holders of the parent – attributable to non-controlling interest Total value of non-controlling interest
Groclin Capital Group
6 989 364
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Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Consideration: Cash paid Deferred payment Receivables and liabilities against SeaTcon Group, directly before the acquisition
1 348 1 537
Total payment
4 127
1 243
Cash outflow on acquisation: Net cash acquired with the subsidiary Cash paid
14 (1 348)
Net cash outflow
(1 335)
The deferred payment contains two installments: - a guaranteed payment for SeaTcon shares postponed until 31st May 2016 in the amount of PLN 676 thousand (including the discount), and - a payment postponed until 31st May 2016 and dependent on sales amount and number of new contracts won by SeaTcon Group in 2014-2015, taking into account the probability of achieving the particular amounts based on Seatcon Group budget received; the payment amounted to PLN 861 thousand (including the discount)
14.
Significant changes in balance sheet items
Intangible assets increased from PLN 44,572 thousand as on 31st December 2013 to PLN 64,821 thousand as on 30th September 2014. Increase of intangible assets in three quarters of 2014 related to: acquisition of assets (mainly R&D works connected with preparation of new production projects as well as ongoing R&D works concerning upgrades in wiring production process), intangible assets related to acquisition of SeaTcon Group (mostly trademark and customer relations) less of amortization and depreciation allowances and adjusted for exchange differences. Tangible fixed assets decreased from PLN 236,031 thousand as on 31st December 2013 to PLN 201,046 thousand as on 30th September 2014. Decrease of tangible fixed assets in three quarters of 2014 related to: sales of a sport and hotel facility, as well as amortization and depreciation allowances partially balanced with acquisition of particularly tangible assets of SeaTcon Group and adjusted for negative exchange differences. Relatively high negative exchange differences for tangible fixed assets result from depreciation of UAH towards PLN which has an effect in decrease of tangible fixed assets held by Ukrainian companies of Groclin Group Increase of inventories in three quarters of 2014 results mostly from larger purchases of raw materials connected with realization of production orders. Increase of trade receivables in three quarters of 2014 resulted mainly from larger sales of Group’s products in the last months of the third quarter of 2014, compared to the end of 2013. Decrease of income tax assets as on 30th September 2014 compared to 31st December 2013 relates to surplus of prepayments for income tax performed during 2013 by KTP and received in 2014. Decrease of other non-financial assets as on 30th September 2014 compared to 31st December 2013 is related to VAT settlement of a trademark sale transaction.
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Exchange differences arising from translation decreased from PLN -7,568 thousand as on 31st December 2013 to -25,612 thousand as on 30th September 2014. The decrease is mainly due to depreciation of Ukrainian hryvnia (UAH), the functional currency of two companies of Groclin Group towards PLN, the presentation currency of the Group’s financial results. The average UAH/PLN exchange rate (announced by NBP) decreased by 31%, from 0.3706 as on 31st December 2013 to 0.2554 as on 30th September 2014. Long-term provisions increased from PLN 2,785 thousand as on 31st December 2013 to PLN 4,454 thousand as on 30th September 2014, as a result of acquisition of SeaTcon Group shares, in the part concerning the acquisition price which was not paid and was depended to a great extent on future financial results achieved by SeaTcon Group. Other short-term non-financial liabilities decreased from PLN 29,054 thousand as on 31st December 2013 to PLN 9,407 thousand as on 30th September 2014. The decrease of other non-financial liabilities was related to VAT settlement of trademark sales transaction. Short-term provisions decreased from PLN 3,466 thousand as on 31 December 2013 to PLN 1,089 thousand as on 30th September 2014. The decrease was due mainly to use of the provision on loss on contracts. Deferred tax asset increased from PLN 2,551 thousand as on 31st December 2013 to PLN 4,468 thousand as on 30th September 2014, while deferred tax liability increased from PLN 15,400 thousand as on 31st December 2013 to PLN 16,264 thousand as on 30th September 2014. Changes of deferred tax result from temporary differences based on which deferred tax is recognized.
15.
Financial instruments
The derivatives used by the Group to hedge against risk of changes in currency exchange rates comprise mainly currency forward contracts and options. Derivative financial instruments of this kind are measured at fair value. Derivatives are carried as assets when their value is positive and as liabilities when their value is negative. Any gains or losses arising from changes in the fair value of derivatives that do not qualify for hedge accounting are taken directly to net profit or loss for the financial year. Fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. Apart from derivatives, the Group’s principal financial instruments comprise bank loans, financial lease agreements, cash and shortterm deposits. The main purpose of these financial instruments is to raise finance for Group’s operations. The Group has other financial instruments such as trade debtors and trade creditors, which arise directly from operations. The principle adopted by the Group currently and throughout the whole period covered by the financial statements is not to trade financial instruments. In the opinion of the Management Board, compared to the annual consolidated financial statements prepared as on 31st December 2013, no material changes of financial risk have occurred. There have been also no changes in objectives and policies of financial risk management. In the third quarter of 2014 (on 30th July 2014 and 6th August 2014), Groclin S.A. concluded derivative transactions for options PUT and CALL related to sale of EUR. The Company covered EUR 7,200 thousand with these instruments. The transactions are settled monthly in three years, twice a month, EUR 150 thousand until 5th and until the last day of each calendar month. From August 2014 until July 2015: EUR 50 thousand twice a month with the exchange rate of 4.1850 and 4.2300; from August 2014 until July 2016: EUR 50 thousand twice a month with the exchange rate of 4.2250 and 4.2700; and from August 2014 until July 2017:
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
EUR 50 thousand twice a month with the exchange rate of 4.2650 and 4.3150. The Company shall not exercise its rights/duties in case the barrier exchange rate (monitored throughout the derivative’s life) reaches in a settlement period the level of 3.8500. Rights and duties resulting from the concluded instruments expire once the barrier has been reached. In the period from August until 30th September 2014, the Company recognized financial income on the grounds of realized options in the amount of PLN 7 thousand.
16.
Capital management
The primary objective of the Group companies’ capital management is to ensure that the Group maintains a strong credit rating and healthy capital ratios in order to support its business operations and maximize shareholder value. In the Management Board’s opinion, compared to the annual consolidated financial statements prepared as on 31st December 2013, there have been no significant changes in the objectives and policies of capital management.
17.
Contingent liabilities and contingent assets
As on 30th September 2014, the Capital Group reported as follows: Promissory notes issued by Groclin S.A.: Agency agreement no 21/4000/09 dated 1st December 2009 - blank promissory note together with promissory note declaration Lease agreement no 501456-EB-0 - blank promissory note together with promissory note declaration Lease agreement no 501900-EB-0 - blank promissory note together with promissory note declaration Lease agreement no IGA/SZ/173045/2014 - blank promissory note together with promissory note declaration Lease agreement no 501900-EB-0 - blank promissory note together with promissory note declaration Lease agreement no L/O/PZ/2014/03/ 0060 - blank promissory note together with promissory note declaration PFRON (State Fund for Rehabilitation of Disabled) agreement no RDK/000020/15/D dated 15th September 2009 blank promissory note together with promissory note declaration PFRON (State Fund for Rehabilitation of Disabled) agreement no RDK/000068/15/D dated 12th March 2010 blank promissory note together with promissory note declaration PFRON (State Fund for Rehabilitation of Disabled) agreement no RDK/000119/15/D dated 20th March 2012 blank promissory note together with promissory note declaration PFRON (State Fund for Rehabilitation of Disabled) agreement no RDK/000155/15/D dated 27th March 2013 blank promissory note together with promissory note declaration Agreement of insurance of customs duties - blank promissory note together with promissory note declaration
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Promissory notes issued by Kabel-Technik-Polska Sp. z o.o.: Framework Agreement 4098/06 - promissory note Lease agreement no KABEL/SZ/126100/2011 - promissory note together with promissory note declaration ZAB/130956/11/80162970 Lease agreement no KABEL/SZ/126101/2011 - promissory note together with promissory note declaration ZAB/130962/11/80162970 Lease agreement no KABEL/SZ/138947/2012 - promissory note together with promissory note declaration ZAB/147403/12/80162970 Lease agreement no KABEL/SZ/140631/2012 - promissory note together with promissory note declaration ZAB/149667/12/8 0162970 Lease agreement no KABEL/SZ/141061/2012 - promissory note together with promissory note declaration ZAB/150485/12/80162970 Lease agreement no KABEL/SZ/141704/2012 - promissory note together with promissory note declaration ZAB/151318/12/80162970 Lease agreement no KABEL/SZ/142798/2012 - promissory note together with promissory note declaration ZAB/153108/12/80162970 Lease agreement no KABEL/SZ/143446/2012 - promissory note together with promissory note declaration ZAB/154140/12/80162970 Lease agreement no KABEL/SZ/143445/2012 - promissory note together with promissory note declaration ZAB/154141/12/80162970 Lease agreement no KABEL/SZ/153147/2013 - blank promissory note together with promissory note declaration ZAB/170446/13/80162970 Lease agreement no KABEL/SZ/153146/2013 - blank promissory note together with promissory note declaration ZAB/170445/13/80162970 Lease agreement no 500343-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 500417-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 500437-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 500480-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 501047-6X-0 - blank promissory note together with promissory note declaration Lease agreement no 501114-EB-0 - blank promissory note together with promissory note declaration Lease agreement no 501417-EB-0 - blank promissory note together with promissory note declaration
Promissory notes issued by IGA Nowa Sól: Agreement on Project Financing no 14/DPW/2006 dated 21st December 2006 (as amended) - blank promissory note together with promissory note declaration
Summary of mortgages on real estate of Groclin, KTP, IGA Nowa Sól and Groclin Service as guarantess of Groclin’s loans:
type
amount
entity entitled
land register no PO1S/00027863/8, PO1S/00041536/1, PO1S/00046994/4,
contractual joint mortgage
23 158 EUR thousand
PKO BP working capital loan
contractual joint mortgage
23 158 EUR thousand
PKO BP investment loan
PO1S/00004348/5, PO1S/00007918/3, PO1S/00028069/9, PO1S/00034687/2, PO1S/00044571/9, PO1S/00040272/5, PO1S/00027873/1, PO1S/00033712/0, PO1E/00025891/6,
contractual joint mortgage
24 750 EUR thousand
BZ WBK working capital loan
PO1E/00034694/1, PO1E/00036966/3, PO1E/00037105/7, PO1S/00039719/1, PO1S/00040241/9, PO1S/00028528/5, PO1S/00047285/8, PO1S/00033993/3, PO1S/00046327/8, PO1S/00006547/4, PO1S/00004209/9 KO1D/00017073/1, KO1D/00018313/3, KO1D/00030338/4, KO1D/00030340/1,
contractual joint mortgage
25 500 EUR thousand
BRE BANK working capital loan
contractual joint mortgage
25 500 EUR thousand
BRE BANK investment loan
KO1D/00030341/8, KO1D/00030342/5, KO1D/00018311/9, KO1D/00030399/1, KO1D/00032104/9; ZG1N/00058057/0, ZG1N/00054415/0, ZG1N/00054447/3
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Summary of mortgages on real estate of KTP as guarantess of KTP loans: ty pe
amount
entity entitled
CONTRACTUAL JOINT ORDINARY MORTGAGE An application has been filed to cancel the mortgage
EUR 1 000 thousand
BRE BANK SA – loan granted in the agreement no 08/169/10/D/IN
EUR 200 thousand
BRE BANK SA SEATED IN WARSAW, SZCZECIN BRANCH - interest and commissions as well as bank proceeding ex penses on loan granted in the agreement no 08/169/10/D/IN
CONTRACTUAL JOINT CAPPED MORTGAGE An application has been filed to cancel the mortgage
land register no KO1D/00018313/3 KO1D/00017073/1 KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00030338/4 KO1D/00018313/3 KO1D/00017073/1 KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00030338/4
CONTRACTUAL JOINT MORTGAGE An application has been filed to cancel the mortgage
EUR 12 075 thousand
BRE BANK SA SEATED IN WARSAW, SZCZECIN BRANCH – Partnership Agreement I no 08/209/06/D/PX dated 30th August 2006
KO1D/00018313/3 KO1D/00017073/1 KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00030338/4 KO1D/00017073/1
CONTRACTUAL JOINT MORTGAGE
EUR 25 500 thousand
BRE BANK SA SEATED IN WARSAW, SZCZECIN BRANCH – agreement for multiproduct line for the group of related entities “Umbrella Wieloproduktowa” no 08/060/13/D/UX dated 05th July 2013. AGREEMENT FOR INVESTMENT LOAN IN EUR No 08/061/13/D/IN dated 05th Jully 2013
KO1D/00018313/3 KO1D/00030338/4 KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00018311/9 KO1D/00032104/9 KO1D/00030339/1
CONTRACTUAL JOINT MORTGAGE
CONTRACTUAL JOINT MORTGAGE
Groclin Capital Group
EUR 23 158 thousand
EUR 24 750 thousand
POWSZECHNA KASA OSZCZĘDNOŚCI BANK POLSKI SPÓŁKA AKCYJNA, WESTERN REGIONAL CORPORATE BRANCH IN POZNAŃ – agreement for inv estment loan no 62102040270000159602094803 dated 05th July 2013 and amended by the annex no 1 dated 05th July 2013 and the annex no 3 dated 16th September 2013 roku, loan agreement in the form of multipurpose credit limit no 49102040270000100211654680 dated 05th July 2013 amended by the annex no 2 dated 16th September 2013
BANK ZACHODNI WBK SPÓŁKA AKCYJNA – agreement for multipurpose and multicurrency credit line no K00015/13 dated 05th July 2013, agreement for currency investment loan no K00016/13 dated 05th July 2013 roku, interest rate swap agreement IRS, which shall be concluded under the framework agreement on the course of conclusion and settlement of the transaction dated 05th July 2013 for the purpose of interest rate v olatility guarantee concerning the investment loan
KO1D/00017073/1 KO1D/00018313/3 KO1D/00030338/4 KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00018311/9 KO1D/00032104/9 KO1D/00030339/1 KO1D/00017073/1 KO1D/00018313/3 KO1D/00030338/4 KO1D/00030340/1 KO1D/00030341/8 KO1D/00030342/5 KO1D/00018311/9 KO1D/00032104/9 KO1D/00030339/1
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PLN thousand
Free-of-charge land easement, meaning unrestricted carriage and passage through land parcel no 502/3 (as described in the land register no KO1D/00017073/1), to hydrophore plant in the land parcel no 502/8, constituted in favor of owners from time to time (perpetual user) of the land parcel no 502/8, which was divided to land
KO1D/00017073/1
parcel no 502/41 (described in the land register no KO1D/00018312/6) and 502/42 (described in the land register no KO1D/00018311/9).
free-of-charge and unlimited in tme transmission easement in the land parcel no 8/9, consisting in: 1) right to use a real estate encumbered to the extent necessary for future foundation of electric device of a electroenergetic cable SN 15KV together with a connector 15 KV; 2) tolerating the existence of dev ices founded in the parcel as mentioned in item 1 after their foundation; 3) right to use the encumbered parcel to the extent necessary for performance of maintenance, repairs,
KO1D/00032104/9
upgrades, removal of failures, and reconstruction of electroenergetic devices and installation as mentioned in items 1 and 2, together with the right to enter the parcel with the appropriate machines for the employees of the energetic company and all other entities and persons with whom the energetic company cooperates in connection with its operations.
17.1. Legal claims During the period covered by this report, Groclin S.A. and its subsidiaries were not a party to any proceedings pending before a court, arbitration or public administrative authority, the unit or joint value of which would equal or exceed 10% of the Company’s equity.
18.
Grants and operations in Special Economic Zone
18.1. Grants Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognized as income respectively to the costs that it is intended to compensate. Grants connected with SEE status and related to particular expense item are recognized as a decrease of the expense item, which the grant is intended to compensate. Grants mainly comprise partial financing of salaries of the employees with disabilities, settled with the State Fund for Rehabilitation of Disabled Persons, as well as partial financing of salaries of employees and apprentices, settled with the Labor Office. If the grant relates to an asset, its fair value is credited to a deferred income account and is released systematically to other operating income in the income statement over the estimated useful life of the relevant asset by way of equal annual installments. Moreover, grants cover the amount of depreciation of purchases financed by the Company’s Fund for Rehabilitation of Disabled Persons (ZFRON) and the State Fund for Rehabilitation of Disabled Persons (PFRON). The grant is recorded as deferred income and released proportionally to depreciation of fixed assets financed by ZFRON or PFRON. Grants received which relate to expenses are presented in operating activities in cash flow statement. In three quarters of 2014, Groclin S.A. and Groclin Service Sp. z o.o. received subsidies for salaries of employees with disabilities in the amount of PLN 9,409 thousand and refund of employees transportation costs (State Fund for Rehabilitation of Disabled
Groclin Capital Group
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Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Persons) in the amount of PLN 540 thousand. Moreover, in three quarters of 2014 Groclin S.A. received a refund from Labor Office in the amount of PLN 10 thousand.
18.2. Operations in Special Economic Zone Groclin Group operates in Kostrzyńsko-Słubicka Special Economic Zone through operations of its subsidiary IGA Nowa Sól. Based on the permission issued by the Kostrzyńsko – Słubicka Special Economic Zone S.A., the subsidiary benefits from the corporate income tax relief as regards the activities carried out under the permission. The tax exemption is of conditional nature. The provisions of the act on special economic zones provide the possibility of losing tax relief if at least one of the following occurs: The Company ceases to conduct business operations in the zone, for which it obtained the permission, The Company severely violates the conditions of the permission, The Company does not remove errors identified during the course of control within the period of time specified in the order issued by appropriate minister for economic affairs, The Company transfers, in any form, the ownership rights to assets to which the tax relief was related within the period shorter than 5 years since introduction of these assets to the fixed assets register, The machines and equipment are transferred to conduct business activities outside the zone, The Company receives reimbursement in any form of the investment expenditures incurred, The Company goes into liquidation or if it is announced bankrupt. The conditions of the exemption have not changed in the reporting period. The Group was not a subject to any inspection by the authorized authorities in three quarters of 2014. If there is insufficient income for the given year to utilize the qualified investment expenditures, then the Company recognizes a deferred tax asset for the excess ascertained. In the period of 1st June 2005 – 31st May 2007, the subsidiary IGA Nowa Sól incurred qualified employment costs in KostrzyńskoSłubicka SEZ in the amount of PLN 8,278 thousand, 50% of which constitutes the amount of possible tax relief. The amount of state subsidies utilized thereof until 30th September 2014 amounted to PLN 600 thousand.
19.
Significant events after balance sheet date
Convention of the Company’s Extraordinary Shareholders Meeting On 7th October 2014, the Management Board of Groclin S.A. informed about convention of the Extraordinary Shareholders Meeting of Groclin S.A., which was held on 4th November 2014 at 11 a.m., in the Company’s seat in Grodzisk Wielkopolski, Słowiańska 4. Changes in the composition of the Supervisory Board On 1st October 2014, Mr. Waldemar Frąckowiak resigned from being a member of the Supervisory Board and serving as the Chairman of the Supervisory Board of the Issuer with immediate effect (current report no 45/2014). On 13th October 2014, Mrs. Maria Drzymała resigned from being a member of the Supervisory Board with the effect on 13th October 2014 (current report no 49/2014). On 4th November 2014, Extraordinary Shareholders Meeting of the Issuer appointed Mr. Wilfried Gerstner and Mr. Michał Głowacki as members of the Supervisory Board. On 4th November 2014, by the power of resolution no 15/2014, The Supervisory Board of Groclin S.A. appointed Mr. Piotr Gałązka as the Chairman of the Supervisory Board of Groclin S.A. and, by the power of resolution no 16/2014, appointed Mr. Michał Głowacki as the Vice-President of the Supervisory Board of Groclin S.A. (current report 55/2014).
Groclin Capital Group
Page 77 of 79
Consolidated quarterly report for the third quarter of 2014 Condensed consolidated financial statements for the nine months’ period ended 30th September 2014
PLN thousand
Changes of hitherto shareholding of the Company On 13th October 2014, the Management Board of Groclin S.A. received a notification from Mrs. Maria Drzymała regarding a decrease of her share in the Company. Mrs. Maria Drzymała informed the Company, based on article 69 item 1 Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies (Journal of Laws 2005, number 184, item 1539), that according to information received from brokerage house dated 9th October 2014 her share in total number of votes in the Company decreased by 2.22%. Hitherto shareholding of Mrs. Maria Drzymała amounted to 1,474,760 shares and constituted 12.74% share in total number of shares, votes and share capital. As a result of the transactions concluded, according to information dated 15th September 2014, shareholding of Mrs. Maria Drzymała amounted to 1,217,461 shares, which constituted 10.52% in total number of shares, votes and share capital. Transactions of sale of 257,299 Company’s shares occurred in a regulated market through Warsaw Stock Exchange in the period 10th September 2014 – 8th October 2014 (current report 50/2014). On 17th October 2014, the Management Board of Groclin S.A. received another notification from Mrs. Maria Drzymała regarding a decrease of his share in the Company. Mrs. Maria Drzymała informed the Company, based on article 69 item 1 Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies (Journal of Laws 2005, number 184, item 1539), that according to information received from brokerage house dated 16th October 2014 her share in total number of votes in the Company decreased below 10%. Hitherto shareholding of Mrs. Maria Drzymała amounted to 1,217,461 shares and constituted 10.52% share in total number of shares, votes and share capital. As a result of the transactions concluded, shareholding of Mrs. Maria Drzymała amounted to 1,131,511 shares, which constituted 9.77% in total number of shares, votes and share capital. Transactions of sale of 85,950 Company’s shares occurred in a regulated market through Warsaw Stock Exchange in the period 9th October 2014 – 13th October 2014 (current report 53/2014) Until the day of approval of the hereby report for publishing, there were no significant events after balance sheet date other than those described in the previous sections of the hereby report.
Signatures of the Management Board’s Members
Position
Pre side n t of the Ma n a ge me nt Boa rd
Groclin Capital Group
N a me a nd surn a me
An dré Ge rstn e r
D a te
Sign a tu re
13 N ove mbe r 2014
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